What is the importance of monetary income or real income in calculatio

1.	What is the importance of monetary income or real income in calculation of national income?OROne cannot neglect the importance of monetary income and real income in calculating national income. Give reason.
Answer» National income is measured by the criterion of money. The question that arises here is that value of money keeps on fluctuating. The instability of money causes price to fluctuate i.e. increase or decrease. -> If we do not consider, calculate and compare national income with some stable prices, we don’t get a correct figure. For example, if the price increases, national income also increases in spite of no rise in production. Hence, increase in national income can be considered true only if there is increase in production too. These concepts are clarified by monetary income and real income. Hence, it is utmost important to study them for calculating national income.

What is the importance of monetary income or real income in calculation of national income?OROne cannot neglect the importance of monetary income and real income in calculating national income. Give reason.

Answer»

National income is measured by the criterion of money. The question that arises here is that value of money keeps on fluctuating.

The instability of money causes price to fluctuate i.e. increase or decrease. -> If we do not consider, calculate and compare national income with some stable prices, we don’t get a correct figure.
For example, if the price increases, national income also increases in spite of no rise in production.
Hence, increase in national income can be considered true only if there is increase in production too.
These concepts are clarified by monetary income and real income. Hence, it is utmost important to study them for calculating national income.