Answer :
we distinguish between nominal income and real income because receiving a salary increase Is better not getting one, but the additional dollars may not allow you to buy as many goods and services as last year, due to inflation.
What is difference between nominal income and real income?
Real income and nominal income are distinct from one another because real income accounts for the effects of inflation, whereas nominal income does not.
The term "nominal income" refers to an individual's actual earnings during a specific time period, such as a month or week, which are not affected by inflation and are fixed in all circumstances. For example, if commodity prices rise, this will not affect the holder of a nominal income because their earnings are fixed, but in the case of real income, the amount of inflation will affect their real income because it is variable. hence Nominal income minus inflation equals real income.
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