real_income; eee 2 Real income shows the true situation of a country.NAVNEE? 128 jonetary income = (2) Explain the concept of ™ oy penne tional income is Ae akoncary tocome if natoal OWE rhe nana nome etn by muse production ofall goods wit the market pice uring the year Is called monetary national + Monetary national income ts not seal income If the production of some year remains constant but the prices have doubled, dhe national income wil be doubled which does not show true situation. Real national income: If national income is measured at base year price or fixed price, it is called real national income. > Real national income is obtained by multiplying, the production of goods with the fixed price of respective goods during the year. — Real national income shows the true situation of a country. > Some increase in national income occurs due to increase in production and price. But we are interested to know the rise in national income, which occurs due to increase in production. So that the consumption and standard of living of people can be higher. # (3) Give the meaning of Per Capita Income and show its importance. Ans. The concept of Per Capita Income has been developed by Prof. Hicks. > Per capita income is a criterion of national development. ~ Fer capita income of a year is obtained by dividing the total national income of a country by the population of that country. It 4s the average income per individual. -¢ ECONOMICS + 55 cabal ee es, calen gs rane the per capita, incomes Die Hes ng of the lens pita Income: ‘a income I capita Inco the growth rate of popuiaia, that of national income > Per <5 tt decreases Hf is higher than Snr easurement of economic develo oy it is @ measure ba But if the inequality of sncome ta) a cot fhereases it is not the true criterion of county, progress. = The comparis by their per capita income. _s Per capita income enables to get the estimate of standard of living of country's citizens, (4) Write short notes on: (a)Gross Domestic Product ‘Ans. The market value of goods and services produced by citizens of a country and foreig. citizens within a country’s boundaries during a year 1s called Gross Domestic Product- GDP. Important facts : + In GDP only the final products are considered. ~ The concept of GDP is related to the boundary of a country. So the income generated by citizens of a country from forelgn countries are not considered. > GDP Is used to show the progress of at economy. So it is used for economic comparison of countries, (b) Net Domestic Product Ans.Net Domestic Product is obtained after Gelueting depreciation of factor of production ross domestic product during a year > NDP = GDP Depreciation con of two countries can be done only the value of production9. NATIONAL 1 _» In GNP total production of 800ds produced ii in the country and foreign country by citizens of the country is considered, _» GNP = GDP + Net foreign income 5 It is used in practice. (d) Net National Product Ans. During the process of production capital depreciation is generated. Net National Product (NNP) is obtained by considering this capital ‘ ¢ q Q é é é 8 2 Q é é 2 ¢ g ° é Q g 3 depreciation. — After deducting depreciation from Gross National Product-GNP the remaining is called the Net National Product (NNP). Important facts: (1)The value of production of current year after deducting depreciation from the GNP is NNP. (2) NNP = GNP - Depreciation (5) Give the explanation about real income. Ans. The national income obtained by multiplying the production of all goods with the fixed price of respective goods during the year 1s called the real national income. z In fact if production and market price | inereaces tha natianal income ine)