Final answer:
Individuals should typically pay more attention to real income because it accounts for inflation and provides a true reflection of their purchasing power and financial status, both today and in eras like the 1970s when inflation was high.
Step-by-step explanation:
When determining whether to pay more attention to real income or nominal income, it is generally more insightful to focus on real income. Real income takes into account the purchasing power of money after adjusting for inflation. Considering that inflation can significantly erode the value of money, real income provides a true reflection of an individual's economic status and the actual growth of their wealth.
In today's world, where economies are often subject to rapid changes in price levels, focusing on nominal income can be misleading. For instance, if your income increases by 5% but inflation is at 3%, the real increase in your purchasing power is only 2%. This distinction is particularly important when planning for financial stability and growth.
The same principle applied in the 1970s, a period marked by high inflation rates. During such times, nominal income growth can appear robust while real income growth remains stagnant or even declines, misleading people about their true financial progress.