question_answer

If real income is Rs 400 and price index is 105, calculate nominal income.

Answer:

Real Income = (Nominal income \[\] Price index of current year) \[\times \] price index of base year.

Let base year?s price index be 100

400 = (nominal income \[\div \,\]105) \[\times \]100

Nominal Income \[=(400\times 105)\div 100\]

= Rs. 420.