The GDP of Company E was $500 million in 1995. The population was 1 million, so the average income was $500. As a result of economic growth, GDP in 2005 was $1,500 million. The population was already 2 million. What was the average income in 2005.

Question

The GDP of Company E was $500 million in 1995. The population was 1 million, so the average income was $500.  As a result of economic growth, GDP in 2005 was $1,500 million. The population was already 2 million. What was the average income in 2005.

I'm guessing 1,500 million means 1.5 billion, so I have 1.5 billion divided by 2,000 equals 7,500

2. Joe had an income of 20,000 in 2004. He received a salary increase of 10 percent in 2005. Inflation was 15 percent. How much did Joe make in 2005?

I have 20,000 times 10 equals 2,000 so 20,000 plus 2,000 is 22,000.

Did his real income rise or fall in 2005? Explain your answer.

It fell because he only received a ten percent increase in his salry. The goods he needs to purchase are 5 percent more expensive than the previous year.