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A person's real income will increase by 5% if her nominal income increases by about 11%, considering we use the current U.S inflation rate of 5.4%.

Real income is described as the gross income that an individual or entity will receive after calculating inflation rates. Whereas nominal income is the income that an entity will receive without taking inflation into account.

For this reason, in order for a person's real income to rise by any percentage, it has to increase by more than the current rate of inflation. In the question, it states that we wish to increase a person's real income by 5%. To do this we must take into account the current United States dollar inflation rate of 5.4%. From here, we must add the numbers together to reach the percent by which the nominal income must increase to attain this result.

This leads us to the conclusion that in order to increase a person's real income by 5%, with a current inflation rate of 5.4%, then we must increase said person's nominal income by 10.4%, or roughly 11% to be safer.

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