To calculate the percentage change in DJ Money Face's real income, we can use two methods that yield approximately the same result. The first method involves directly calculating the percentage change in real income using the formula:

Percentage Change = (New Value - Old Value) / Old Value

In this case, the new real income for 2018 is $20,833.33, and the old real income for 2017 is $16,949.15. Plugging these values into the formula gives:

Percentage Change = (20,833.33 - 16,949.15) / 16,949.15

Calculating this results in:

Percentage Change ≈ 0.23

This decimal can be converted to a percentage by multiplying by 100, resulting in an approximate 23% increase in real income.

The second method involves using the relationship between nominal income, the Consumer Price Index (CPI), and real income. The formula for the percentage change in real income can be expressed as:

Percentage Change in Real Income = Percentage Change in Nominal Income - Percentage Change in CPI

First, we calculate the percentage change in nominal income. The nominal income for 2018 is $25,000, and for 2017 it is $20,000. Using the same percentage change formula:

Percentage Change in Nominal Income = (25,000 - 20,000) / 20,000

This results in:

Percentage Change in Nominal Income = 0.25

Next, we calculate the percentage change in CPI, where the CPI for 2018 is 120 and for 2017 is 118:

Percentage Change in CPI = (120 - 118) / 118

This gives us:

Percentage Change in CPI ≈ 0.017

Now, substituting these values back into the formula for the percentage change in real income:

Percentage Change in Real Income = 0.25 - 0.017

This results in:

Percentage Change in Real Income ≈ 0.233

Again, converting this to a percentage gives approximately 23%. Both methods confirm that the percentage change in real income is around 23%, demonstrating the consistency of the calculations.

Understanding these calculations is crucial for analyzing economic indicators and assessing the real purchasing power of income over time.

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