Question

Q.8 How real income is different from nominal income? Explain with help of numerical

Answer 1

Real income, also known as real wage, is how much money an individual or entity makes after adjusting for inflation. Real income differs from nominal income, which has no such adjustments.

Nominal income is income that is not adjusted for changes in purchasing power, the amount of goods or services that one can afford with the income, owing to inflation. ... Suppose that the nominal income of a U.S. resident rises by $1 and that of a Ugandan resident also rises by the same amount.