What is Real Income in Economics

Answer 1

Real income, also known as real earnings or real wages, refers to the purchasing power of an individual's income after accounting for inflation. It is a measurement that takes into consideration the impact of changes in the general price level on the purchasing power of an individual's income. By adjusting for inflation, real income allows economists to compare income levels across different time periods or countries with varying price levels. Real income is commonly used to analyze changes in standards of living, economic growth, and inequality over time.