Alright. Now let's calculate the percentage change in DJ Money Face's real income. Now there's 2 ways we can go about this. We can find the percentage change so if we go above remember the percentage change in real income well that's the percentage change in nominal income minus the percentage change in the price level and that will approximate the percentage change in real income. But we've already calculated the real income, right? So remember, anytime we're doing percentage change, it's just new minus old divided by old. New minus old divided by old. Right? That's how we do percentage change formulas. So, I'll go through both of them just so you see that we get approximately the same answer to 2 decimal places here. So let's go ahead and do let's start by just taking the real income and finding the percentage change between our real incomes. So percentage change in real income. So we would take the new which was 20,000 833.33 minus the old which was 16,949.15, right, the 2018 minus 2017 real income and divided by the old, 16,949.15. Okay. So what's that going to give us here? If we do this math, 20,833.33 minus 16,949.15, and we divide that by 16,949.15, and it gives us approximately 0.23 and that's as a decimal, so that equals 23% approximately. 23% change in real income when we calculate it that way.

Now, let's calculate it the other way where we're going to take the percentage change So remember, in our formula, we had the percentage change in real income, I'll put RI for real income, is equal to the percentage change in nominal income minus the percentage change in CPI, right? The price level, okay? So instead of if we hadn't calculated the real income already, we could have just taken the nominal income and the price level and found the percentage change in each of those. So let's go ahead and do that. Let's start with the nominal income and the nominal income was 25,000 in 2018, 20,000 in 2017 and we'll put 20,000 in the denominator, right? New minus old divided by old and we'll subtract from that this percentage change in CPI. So CPI was 120 in 2018, 118 in 2017, and divided by 118. Right? New minus old divided by old. So let's get each of these numbers. So let's do 25,000 minus 20,000 divided by 20,000. That gives us 0.25. And what about the other one? 120 minus 118 divided by 118. Whoops. Let me try that again. 120 minus 118 divided by 118, it gives us 0.017. We'll round it to there, and what does that give us? So, the percentage change in real income would be the difference of these 2, which is equal to 0.25-0.017=0.233. So again, this is an approximation. This is like when we had our Fisher equation and we got an approximation here. Same thing going on here but to a certain extent gets us approximately to the correct answer. Right? 23% as well. So that's the easy way to do it. Let me get out of the way. When we have just the nominal and the CPI. So if they had given you the percentage change in the nominal income and the percentage change in CPI, well, you would know just to subtract the 2 just like in our equation. If they had just given you those percentage changes in a multiple choice for example, well, you would just subtract them to get an approximate for the percentage change in real income. Cool? Alright. So a bit of math there but nothing too crazy. Just a percentage change formula and putting it to work. Alright. So that's how we calculate real income. Let's go ahead and move on to the next video.