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  • Writer's pictureGerd Weyer

Relative Income

Individual capacity to purchase goods and services depends on per capita economic output and relative income from the sum of wages, compensation, and transfer. There are a certain number of goods and services produced within a society, and relative income largely determines what proportion an individual can purchase. Transfer refers to gifts and benefits received from government social programs. When the relative income of investors increases because of the rising stock market, the purchasing power of others must decline.

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