Per Capita Income

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Per capita income is calculated by taking the total income, mostly wages, of a group of individuals, often a nation or a population of a specific geographic area, and dividing it by the number of individuals in the group. The resulting number is the per capita income, or income per person. Per capita income does not account for the uneven distribution of income, or wealth, among the individuals in the group. Per capita income is also usually stated in monetary units that do not reflect the effects of inflation or deflation. Per capita income can, however, be adjusted to account for changes in purchasing power and prices during a specific period of time. The adjusted per capita income is referred to as per capita real income.