If your income increases 20% in a year in which inflation is 10%, your real income has

Name: If your income increases 20% in a year in which inflation is 10%, your real income has
Brand: Quizplus
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Question

Quizplus · Accepted Answer

To calculate real income, we must adjust the nominal income (the actual increase of 20%) for inflation. We do this by subtracting the inflation rate (10%) from the nominal income increase (20% - 10% = 10%). Therefore, the real income has only increased by 10%.

If Your Income Increases 20% in a Year in Which