Answer:
The real income will be $41,666.67.
The total income has increased by $1,666.67.
Explanation:
The salary in the last year is $40,000.
The salary in the current year is $50,000.
The CPI in the last year was 100.
The CPI in this period is 120.
The real income will be
= [tex]\frac{Current\ Income\ \times\ Last\ year\ CPI}{Current\ year\ CPI}[/tex]
= [tex]\frac{50,000\ \times\ 100}{120}[/tex]
= $41,666.67
The total income has increased by
= $41,666.67 - $40,000
= $1,666.67
