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Given nominal income how can we find real income ? Explain.

Posted by Aahna Kansal 4 years, 6 months ago

CBSE > Class 12 > Economics

1 answers

Yogita Ingle 4 years, 6 months ago

Nominal income is the income one gets in money terms and real income is the amount of goods and services a person can buy from the nominal income. Nominal income is calculated with current year price and real income is calculated with base year' price. Real income is calculated by dividing nominal income by the price level. For example:
If Real income is Rs.400 and Price Index is 105, Nominal Income will be Real Income = (Nominal Income,/Price Index of the Current Year) x 100
400 = (Nominal Income/105) x 100 nominal income= Rs.420

3Thank You

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CBSE > Class 12 > Economics