## Step 1: Calculate the Inflation Rate The **inflation rate** is calculated using the Consumer Price Index (CPI) values: \[ \text{Inflation Rate} = \frac{\text{CPI}_{\text{this year}} - \text{CPI}_{\text{last year}}}{\text{CPI}_{\text{last year}}} \times 100 \] Plug in the numbers: \[ \text{Inflation Rate} = \frac{176 - 160}{160} \times 100 = \frac{16}{160} \times 100 = 10\% \] **Explanation:** The inflation rate over the period is **10%**. --- ## Step 2: Determine Change in Real Income First, calculate the percentage increase in **nominal income**: \[ \text{Nominal Income Increase} = \frac{52,000 - 48,000}{48,000} \times 100 = \frac{4,000}{48,000} \times 100 \approx 8.33\% \] Compare this to the inflation rate (10%): - Nominal income increased by **8.33%** - Prices (inflation) increased by **10%** Since the increase in nominal income is **less than the inflation rate**, **real income has decreased**. **Explanation:** Although the worker's nominal income rose, it did not keep up with inflation, so their real purchasing power fell. --- ## Final Answer - **Inflation rate:** 10% - **Real income:** Decreased