Question 1190171
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Problem 1


difference = new salary - old salary
difference = 55,000 - 50,000
difference = 5,000


percent change = (difference)/(original)
percent change = (5,000)/(50,000)
percent change = 1/10
percent change = 0.10
percent change = 10%


Your answer for problem 1 is correct. 
Earl got a <font color=red>10%</font> raise if we ignore the aspect about inflation.


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Problem 2


Let's say Earl wants to buy a car worth $50,000
Without inflation, the price would stay where it is.


With the 3.3% inflation, the price increases to 1.033*50,000 = 51,650


Effectively Earl loses $1,650 in earnings due to this rate of inflation (since 51,560-50,000 = 1,650)
In other words, he would need to earn an additional $1,650 in order to keep up with inflation.
It is said that the inflation "eats" away at those earnings so to speak.


His new salary of $55,000 is really 55,000 - 1,650 = 53,350 dollars when considering inflation.


Notice that without inflation, we could say
50,000*1.10 = 55,000
and with the 3.3% inflation, we could say
50,000*(1.10-0.033) = 53,350


The 10% raise is really 10% - 3.3% = 6.7% when considering inflation.


Answer: <font color=red>$53,350</font>


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Problem 3


Earlier we calculated the real raise percentage was 6.7% (refer to the tail end of problem 2).


Here's another approach


difference = new salary - old salary
difference = 53,350 - 50,000
difference = 3,350


percent change = (difference)/(original)
percent change = (3,350)/(50,000)
percent change = 0.067
percent change = 6.7%


Answer: <font color=red>6.7%</font>
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