The formula for calculating the Income Index is:
\[ II = \frac{I}{N} \times 100 \]
Where:
An income index is a statistical measure that reflects the earning power of an individual, household, or population group. It is often used in economic studies and policy making to assess the economic well-being and standard of living in a particular area. The index may consider factors such as wages, benefits, cost of living, and inflation. It can also be used to compare income levels across different regions or periods.
Let's assume the following values:
Using the formula to calculate the Income Index:
\[ II = \frac{50000}{40000} \times 100 = 125\% \]
The Income Index is 125%, indicating that the individual's income is 25% higher than the national average.