You made $3000 on a part-time job last year. If you expect to make the same amount this year, and the inflation rate is three percent, what is your purchasing power?
100% - 3% = 97%.
B.P. = 0.97 * 3000 = $2910. = Buying
power.
To calculate your purchasing power, we need to adjust your income for inflation. Here's how you can do it step-by-step:
Step 1: Calculate the inflation-adjusted income.
- Inflation rate = 3%
- Income last year = $3000
Formula: Inflation-adjusted income = Income last year / (1 + Inflation rate/100)
Calculation: Inflation-adjusted income = $3000 / (1 + 3/100)
= $3000 / 1.03
≈ $2912.62 (rounded to the nearest cent)
Step 2: Compare the inflation-adjusted income to the income last year.
Calculation: Purchasing power = (Inflation-adjusted income / Income last year) * 100
Purchasing power = ($2912.62 / $3000) * 100
≈ 97.09%
So, compared to last year, your purchasing power this year is approximately 97.09%.
To calculate your purchasing power, we first need to adjust the $3000 to account for inflation.
The inflation rate is given as three percent, which means that the general price level of goods and services is expected to increase by three percent.
To calculate the adjusted income for this year, we need to increase your previous year's income by three percent. We can do this by multiplying $3000 by 1 plus the inflation rate of three percent:
Adjusted income = $3000 * (1 + 0.03) = $3000 * 1.03 = $3090
Therefore, your adjusted income for this year, considering the inflation rate, is $3090.
Now, to determine your purchasing power, we compare your adjusted income to the prices of goods and services in the current year. If the general price level of goods and services has increased by three percent due to inflation, your purchasing power remains the same if the prices of goods and services have also increased by the same rate.
Therefore, your purchasing power would remain the same if the prices of goods and services have also increased by three percent. In this case, your purchasing power would still be $3090.
However, if the prices of goods and services have increased more than three percent, your purchasing power would decrease. Conversely, if the prices have increased less than three percent, your purchasing power would increase.
So, without information about how the prices have changed, we can only conclude that your purchasing power is expected to either remain the same or decrease, depending on the actual increase in prices of goods and services.