If your annual income from a part-time job is $4523, and the inflation rate is 6 percent, what is the purchasing power of your income?
To determine the purchasing power of your income, we need to take into account the effect of inflation. Here's how we can calculate it:
Step 1: Calculate the amount of inflation:
Inflation rate = 6%
Inflation amount = (6/100) * $4523
Step 2: Calculate the new income after accounting for inflation:
New income = $4523 - Inflation amount
Step 3: Calculate the purchasing power of the income:
Purchasing power = New income / (1 + Inflation rate)
Let's plug in the values and calculate:
Inflation amount = (6/100) * $4523 = $271.38
New income = $4523 - $271.38 = $4251.62
Purchasing power = $4251.62 / (1 + 0.06)
Therefore, the purchasing power of your income is approximately $4003.42.