Purchasing power - Nominal vs Real

Economics
Tutor: None Selected Time limit: 1 Day

Oct 7th, 2015

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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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Oct 7th, 2015

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