(a) Calculate the change in real incomes? (b) Which country has experienced an incerase in real average income

Question

Rise average incomes (%) 2003 Rate inflation UK : 3.6 2.5 Venezuela: 28.9 36.6 (This is an example)

Answer 1

Real change is the difference between that 'headline' rates ...

[ Journalists have no real understanding of maths, let alone finance (they did 'Drama' and 'Media Studies' at school), so they publish one or other set of 'raw' data with no comparisons, hence the term 'headline' ]

IF (for example) your Income was up 10% (so you receive £110 in wages for every £100 you used to get) but Inflation was also up 10% (so you now pay £110 for things that used to cost £100), you are in simply 'standing still'

SO, from you example,

UK 3.6 - 2.5 = +1.1% real (increase) in income

Venezuela 28.9 - 36.6 = -7.7% real (decrease) in income

(NB are you sure you have the rates the 'right' way around ?)