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At the time of calculation of National Income, goods and services are multiplied by their prices. If the quantity of national product is multiplied by the current prices we call it national income at the current price or monetary income. Conversely, if the quantity of national product is multiplied with the price of some fixed period i.e. base year, the result obtained is called National Income at constant prices or Real National Income. Prices keep on changing. As a result of it, National Income is subject to increase or decrease without any change in the number of goods and services. In order to estimate the real economic progress of a country, the national income of different years should be measured at the prices of some particular period of a year an account of constant prices, real income will only change with the change in the number of goods and services.(a) What do you mean by National Income?(b) State the difference between Gross national income and net national income. |
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Answer» (a) National income is the net factor income earned by normal residents of a country in the form of wages, rent, interest, and profit in one year. This is the sum of domestic factor income and net factor income. (b)
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