The GDP of Company E was $500 million in 1995. The population was 1 million, so the average income was $500. As a result of economic growth, GDP in 2005 was $1,500 million. The population was already 2 million. What was the average income in 2005.
I'm guessing 1,500 million means 1.5 billion, so I have 1.5 billion divided by 2,000 equals 7,500
2. Joe had an income of 20,000 in 2004. He received a salary increase of 10 percent in 2005. Inflation was 15 percent. How much did Joe make in 2005?
I have 20,000 times 10 equals 2,000 so 20,000 plus 2,000 is 22,000.
Did his real income rise or fall in 2005? Explain your answer.
It fell because he only received a ten percent increase in his salry. The goods he needs to purchase are 5 percent more expensive than the previous year.
To calculate the average income in 2005, we need to divide the GDP by the population. Given that the GDP in 2005 was $1,500 million (or $1.5 billion) and the population was 2 million people, we can divide the GDP by the population: $1.5 billion / 2,000,000 = $750. Therefore, the average income in 2005 was $750.
For Joe's income in 2005, we start with his initial income in 2004, which was $20,000. Then, we calculate his salary increase of 10%, which is $20,000 x 10/100 = $2,000. Adding this increase to his initial income, we get $20,000 + $2,000 = $22,000. Therefore, Joe made $22,000 in 2005.
To determine whether Joe's real income rose or fell in 2005, we need to consider the impact of inflation. In this case, inflation was 15%. Since Joe's salary increase of 10% is less than the inflation rate, it means that the goods Joe needs to purchase are more expensive by a larger percentage than the increase in his salary. Consequently, Joe's real income fell in 2005.