Unit I-Economics-02-National Income - Measurement
What are some examples of deductions in private income?
Deductions include income from government departments, surpluses of public undertakings, employee contributions to provident funds and life insurance, etc.
How is disposable income calculated?
Disposable income = personal income - direct taxes
What can individuals and families do with disposable income?
Disposable income can be spent on consumption or savings by individuals and families.
Define disposable income.
Disposable income, also known as disposable personal income (DPI), is the amount of an individual or household's income after deductions of all personal income taxes and payments to the government.
Define economics.
Economics is the study of how individuals, businesses, and societies allocate scarce resources to satisfy unlimited wants and needs.
Give examples of private investment in the context of national income measurement.
Examples of private investment include investment in capital goods like machines, plant setup, inventories, plots, and houses.
Define factor income.
Factor income refers to the total income received by factors of production, such as land, labor, capital, and enterprise.
Explain government consumption in the context of national income measurement.
Government consumption refers to the expenditure on compensation of employees and social benefits like pensions and unemployment allowances.
What is meant by government investment in the context of national income measurement?
Government investment refers to the construction of dams, bridges, machines, transport vehicles, power plants, and other infrastructure projects.
Describe the process of measuring national income.
Measuring national income involves calculating the total value of all goods and services produced within a country, including consumption, investment, government spending, and net exports.
How is NNP at factor cost calculated?
NNP at factor cost is calculated by subtracting indirect taxes and adding subsidies from NNP at market price.
Describe the concept of national income.
National income is the value of goods produced and expressed in terms of money at current prices.
What is the concept of national income?
National income refers to the total value of all goods and services produced within a country during a specific time period.
What is net foreign investment in the expenditure method?
Net foreign investment is calculated by subtracting the value of imports from the value of exports of merchandise and services in a year.
Why does per capita income not provide a clear picture of the disposable income of the common man?
Per capita income does not consider the unequal distribution of national income, resulting in a wide gap between the poor and rich.
Define per capita income.
Per capita income measures the average income earned per person in a given area in a specified year.
Define private consumption in the context of national income measurement.
Private consumption refers to the consumption of durable and non-durable consumer goods, as well as utility services provided by the public.
What is the formula for calculating private income?
Private income = (NNP at factor cost) + (Transfer payments) - (Deductions)
Describe private income.
Private income is any type of income received by a private individual or household, often derived from occupational activities or income from investments or renting property.
What is real income?
Real income is calculated by dividing nominal income by the price level.
What is the purpose of using a base year in measuring real income?
The base year is used to assess the general level of prices of a given year and calculate the real national net product.
What are the components of final expenditure in the expenditure method?
The components of final expenditure are private consumption, private investment, government consumption, government investment, and net foreign investment.
Describe the expenditure approach to measuring national income.
The expenditure approach measures national income by calculating the size of total expenditure in an economy.
Describe the expenditure method of measuring national.
The expenditure method assumes that the income generated in an economy can be disposed of either on consumption of goods and services or in investment. It states that national income equals national expenditure.
Who are included in the household sector in national income measurement?
The household sector includes individuals, non-government, non-corporate enterprises like sole proprietorship firms, partnerships, and non-profit institutions.
Explain the income method of measuring national income.
The income method measures national income by calculating the total income received by all factors of production in an economy during a certain period.
What is included in the product approach to measuring national income?
The product approach includes only the final goods and services produced and excludes intermediary goods and services, as well as illegal productive activities.
What is the product approach to measuring national income?
The product approach measures national income by calculating the total value of final goods and services produced in a country during a year.
What are the three broad categories of factor income?
The three categories of factor income are wage income/labour income, capital income/non-wage income, and mixed/other income.
Describe the three ways in which the size of national income can be measured.
The three ways to measure national income are the product approach, income approach, and expenditure approach.
Describe transfer payments.
Transfer payments include pensions, unemployment allowances, social security benefits, gifts from abroad, windfall gains, and interest on public debt.
