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Question : 5
Total: 16
Given nominal income, how can we find real income? Explain.
Solution:
Real income can be calculated by applying the following formula :
Real Income =
Index of current year ×
Consider price index of base year as 100
When nominal income is given, we can convert it into real income with the help of GDP deflator.
Real Income=
× 100
Real Income =
Consider price index of base year as 100
When nominal income is given, we can convert it into real income with the help of GDP deflator.
Real Income
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