Given the wage in dollar per day and the CPI for years 1 and 2 how do you calculate the nominal % increase in wage and the real % increase in wage?

I am not sure what to do for this or what the formula is if any. Thank you for your help.

To calculate the nominal percentage increase in wage, you will need the wage in dollars per day for year 1 and year 2. The formula for calculating the nominal percentage increase is as follows:

Nominal % Increase = ((Wage in Year 2 - Wage in Year 1) / Wage in Year 1) * 100

For example, let's say the wage in year 1 is $50 per day and the wage in year 2 is $60 per day. Using the formula:

Nominal % Increase = (($60 - $50) / $50) * 100
= ($10 / $50) * 100
= 0.2 * 100
= 20%

So, in this example, the nominal percentage increase in wage is 20%.

To calculate the real percentage increase in wage, you will also need the Consumer Price Index (CPI) for year 1 and year 2. The formula for calculating the real percentage increase is as follows:

Real % Increase = (((Wage in Year 2 / CPI in Year 2) - (Wage in Year 1 / CPI in Year 1)) / (Wage in Year 1 / CPI in Year 1)) * 100

For example, let's say the CPI in year 1 is 100 and the CPI in year 2 is 110. Using the same wages as the previous example:

Real % Increase = ((($60 / 110) - ($50 / 100)) / ($50 / 100)) * 100
= (((0.545 - 0.5) / 0.5) * 100
= (0.045 / 0.5) * 100
= 0.09 * 100
= 9%

So, in this example, the real percentage increase in wage is 9%.

Remember, the nominal percentage increase only takes into account the change in wage over time, while the real percentage increase considers the impact of inflation by factoring in the change in the CPI.