11. Unemployment and Inflation

Celebrity McRockstar is the lead singer of the world’s best band. She started her band in 2010. Since she was new to the scene, she only made \$20,000 in 2010. However, in 2020, she earned \$2,000,000 from selling her records. Being so cool, Celebrity McRockstar got even more famous between 2020 and 2025. In 2025, she was able to earn \$2,500,000. Assume 2010 is our base year, 2020 has a CPI of 120, and 2025 has a CPI of 140.

A. What was Celebrity McRockstar’s real income in 2020?

Celebrity McRockstar is the lead singer of the world’s best band. She started her band in 2010. Since she was new to the scene, she only made \$20,000 in 2010. However, in 2020, she earned \$2,000,000 from selling her records. Being so cool, Celebrity McRockstar got even more famous between 2020 and 2025. In 2025, she was able to earn \$2,500,000. Assume 2010 is our base year, 2020 has a CPI of 120, and 2025 has a CPI of 140.

B. What was Celebrity McRockstar’s real income in 2025?

Celebrity McRockstar is the lead singer of the world’s best band. She started her band in 2010. Since she was new to the scene, she only made \$20,000 in 2010. However, in 2020, she earned \$2,000,000 from selling her records. Being so cool, Celebrity McRockstar got even more famous between 2020 and 2025. In 2025, she was able to earn \$2,500,000. Assume 2010 is our base year, 2020 has a CPI of 120, and 2025 has a CPI of 140.

C. What was the percentage change in Celebrity McRockstar’s real income between 2020 and 2025? What was the percentage change in her nominal income?