| Define National Income | “The labour and capital of a country acting on its natural resources produce annually a certain net aggregate of commodities, material and immaterial including services of all kinds. This is the true net annual income or revenue of the country or national dividend”.
-Alfred Marshall. |
| Write the formula for calculating GNP. | The formula for calculating GNP= (C + I + G + (X-M) + (R-P)). |
| Trace the relationship between GNP and NNP. | GNP Gross National Product is the total measure of the flow of final goods and services at market value resulting from current production in a country during a year, including net income from abroad
NNP Net National Product refers to the value of the net output of the economy during the year. NNP is obtained by deducting the value of depreciation, or replacement allowance of the capital assets
from the GNP. |
| What do you mean by the term ‘Personal Income’? | Personal income |
| Define GDP deflator. | Deflator |
| What do you mean by the term ‘Personal Income’? | Personal income is the total income received by the individuals of a country from all sources before payment of direct taxes in a . Personal income is derived from national income by deducting
undistributed corporate profit, and employees’ contributions to social security schemes and adding transfer payment. |
| Define GDP deflator. | GDP deflator is an index of price changes of goods and services included in GDP. It is a price index which is calculated by dividing the nominal GDP in a given year by the real GDP for the same year and multiplying it by 100. |
| Why is self consumption difficult in measuring national income? | 1. Farmers keep a large portion of food and other goods produced on the farm for self consumption.
2. The problem is whether that part of the produce which is not sold in the market can be included in national income or not. |
