If the average level of nominal income in a nation is $21,000 and the price level index is 154, the average real income is about:-
a)$12,546 b)$13,636 c)$15,299 d)$17,823
real income= avglevel/priceindex
$13636
$13,636
To calculate the average real income, we need to divide the average nominal income by the price level index.
The formula to calculate real income is:
Real Income = Nominal Income / Price Level Index
Let's plug in the values given:
Average nominal income = $21,000
Price level index = 154
Real Income = $21,000 / 154
Calculating this, we get:
Real Income ≈ $136.36
To convert this to an annual average real income, we multiply by 12, assuming a 12-month period:
Annual Average Real Income ≈ $136.36 × 12
Annual Average Real Income ≈ $1,636.36
Rounded to the nearest dollar, the average real income is approximately $1,636.
Therefore, the correct answer is (b) $13,636.