If your income increased from $23,000 to $26,000 during a period when the rate of inflation was 4 percent, your real income after the raise was:

a. $23,000.

b. $24,000.

c. $25,000.

d. $26,000.

Real income after the raise was: c. $25,000

Explanation:

Real income refers to the wages of an individual or entity after adjusting for inflation.

Real income is calculated by the following formula:

Real Income = Wages / (1 + Inflation Rate) = Income / (1 + Inflation Rate)

The income after raise was $26,000 and the rate of inflation was 4 percent. Real income after the raise = Income / (1 + Inflation Rate) = $26,000 / (1+4%) = $25,000