Real Income

Real income is the amount of money a person or household has left after paying for taxes and inflation. It is a measure of a person's or household's purchasing power. Real income is calculated by taking a person's or household's nominal income (before taxes and inflation) and subtracting the amount of taxes they pay and the amount of inflation that has occurred.

Real income is an important measure of a person's or household's financial well-being because it shows how much money they have left to spend on goods and services. Real income can be used to compare the financial well-being of people or households over time and to compare the financial well-being of people or households in different countries.

There are a number of factors that can affect real income, including changes in wages, changes in the price of goods and services, and changes in government policies. Changes in wages can affect real income because they can affect the amount of money a person or household has to spend. Changes in the price of goods and services can also affect real income because they can make it more or less expensive for a person or household to buy the things they need. Government policies can also affect real income, such as policies that increase or decrease taxes or policies that affect the price of goods and services.

Real income is an important concept in economics because it is a measure of a person's or household's financial well-being. Real income can be used to compare the financial well-being of people or households over time and to compare the financial well-being of people or households in different countries.