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Real Income

Real Income Definition

Is the income of individuals or groups after adjusting for inflation on purchasing power. It is calculated by subtracting inflation from the nominal income.


Additional meaning of Real Income:

Real income refers to the amount of goods and services that can be bought today compared to the price of the same goods and services that could have been purchased in another time period. For example, if it costs $500 more to purchase the same amount of goods and services this year compared to last year, and the nominal income is the same, then the real income has decreased by $500.


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