Q. The national income of a country for a given period is equal to the
- total value of goods and services produced by the nationals
- sum of total expenditure
- sum of personal income of all individuals
- money value of final goods and services produced
Answer: (d) money value of final goods and services produced
Notes:
- It refers to the aggregate value of all the final goods and services produced in a country in a particular period of time (usually one financial year).
- National Income = C + I + G + (X – M)
- Where,
- C = Total Consumption Expenditure
- I = Total Investment Expenditure
- G = Total Government Expenditure
- X = Export, M = Import
- Where,
- It can be measured by Gross National Product (GNP), Gross Domestic Product (GDP), Gross National Income (GNI), Net National Product (NNP), Net National Income (NNI) and Per-Capita Income (PCI).
- National income= NNP @Market price – indirect tax + subsidies.
- NNP @Market price = GNP – Depreciation
- GNP=GDP + Net factor income from abroad.
- It should be noted that national income is not the sum of all incomes earned by all citizens, but only those incomes which accrue due to participation in the production process.
- Individuals participate in the production process by supplying factors of production which they possess.