National Income

I. Choose the correct answer:

1. National Income is otherwise called Gross National Product

2. National income of a country can be calculated by 3 methods

3. Net National Product = GNP – Depreciation

4. India’s Per capita income is 950 dollars

5. Primary sector consists of Agriculture

6. National Income is a measure of Total value of goods & services

7. Expenditure method estimates national income from the Savings side

8. Income method sums all forms of Income

9. Percapita Income is an indicator of Living Standard of people

10. Primary sector contribution to national income in India is 15.8%

II. Write short notes on the following:

1. Define National income.

Definition of National Income

“National Income is a measure of the total value of goods and services produced by an economy over a period of time, normally a year”. Commonly National Income is called as Gross National Product or National Dividend.

2. How you arrive at NNP?

Net National Product (NNP)

Net National Product is arrived by making some adjustment with regard to depreciation. That is we arrive the NNP by deducting the value of depreciation from Gross National Products (GNP)

NNP= GNP (-) Depreciation

3. Write a note on Income method.

In this method, the Income and Payments received by all the people in the country are calculated.

4. What is Percapita Income?

Percapita Income (PCI)

Percapita Income is an indicator to show the living standard of people in a country.

It is obtained by dividing the national income by the population of a country.

Percapita Income = National Income / Population

5. Write any two needs for the study of National Income

Need for the study of National Income:-

  • To measure the size of the economy and economic performance.
  • To measure the production of goods and services.
  • To trace the trend of the economic growth of our country in relation other countries.

6. What is tertiary sector?

Tertiary sector is service sector

Tertiary sector includes trade, hotel, industry, transport, storage, communication, finance, insurance, real estate and social services.

7. What is Laissez – faire?

Laissez-faire means non-intervention by the government.

The government was more or less a police state.

Government functions catering to the needs of the people.

8. Write a note on the Protective functions of modern welfare state.

Protective functions:-

  • Economic development can be achieved only if there is peace in the state.
  • Government is to maintain law and order.
  • Protecting the people from external aggression and internal disorder.

9. Define Gross Domestic Product.

Gross Domestic Product (GDP)

Gross Domestic Product is the total value of output (goods and services) produced by the factors of production within the geographical boundaries of the country.

10. What is net Domestic Product?

Net Domestic Product (NDP)

Net Domestic Product is part of Gross Domestic product. Net Domestic Product is obtained from the Gross Domestic Product by deducting the quantum of tear and wear expenses (depreciation).

III. Write in a paragraph:

1. Explain two basic concepts of National Income.

Net National Product (NNP):-

Net National Product is arrived by making some adjustment with regard to depreciation. That is, we arrive NNP by deducting the value of depreciation from Gross Domestic Product.

NNP = GNP (-) Depreciation

Gross Domestic Product (GDP):-

Gross Domestic Product is the total value of output (goods and services) produced by the factor of production within the geographical boundaries of the country.

Percapita Income (PCI):-

Percapita Income is an indicator to show the living standard of people in a country.

It is obtained by dividing the National Income by the population of a country.

Percapita Income = National Income/Population

2. Explain the need for the study of National Income.

Need for the study of National Income:-

  • To measure the size of the economy and economic performance.
  • To measure the production of goods and services .
  • To trace the trend of the economic growth of our country in relation other countries.
  • To know the contribution of primary, secondary and tertiary sector in the National Income.
  • To help Government, to formulate development plans and policies to increase economic growth.

3. Explain the methods of calculating National Income.

Method of calculating National Income:-

Product method:-

In this method the total value of all goods and services produced in a country is taken into account.

Income method:-

In this method, the income and payments received by all the people in the country are calculated.

Expenditure method:-

In this method we add up the expenditure of all people on consumer goods, investment and saving.

4 Write about the Functions of Modern Welfare State.

Functions of Modern welfare state:-

Protective functions:-

Economic development can be achieved only if there is peace in the state.

Government is to maintain law and order.

Protecting the people from external aggression and internal disorder.

The Administrative functions:-

The three important wings of the state are legislature, Executive and Judiciary.

Social Security functions:-

The government undertakes social security measures by offering relief to the poor, sick and the unemployed.

Economic functions:-

The government takes various measures to improve agriculture and develop trade and industry.

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