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Formula to be used -

Real income = nominal income/ price index

Real income is the measure of purchasing power

Using the above formula, year wise real income is -

Year Real Income

2008 $500

2009 $480

2010 $500

2011 $481.48

2012 $503.37

2013 $503.37

Hence real income was greatest in year 2012 and 2013. Thus nominal income had greatest purchasing power in both these years (2012 and 2013)

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