Economics · Class 11 Commerce
Ch 9National Income — Class 11 Economics, concept-first.
National income is the single most important measure economists use to gauge the size and growth of a country's economy. In simple terms, national income is the total money value of all final goods and services produced by the normal residents of a country during one accounting year (usually 1st April to 31st March in…
Key concepts
Hover a concept to preview it and jump to its most relevant Q&A.
Circular Flow of Income and National Income Aggregates
Households and firms exchange factor services and goods/services in a continuous circular flow, which is why the value of production, income and expenditure in an economy are equal over a year.
Most relevant Q&A
- Define Gross Domestic Product (GDP) and Gross National Product (GNP). State the formula that connects them.Free
- Which of the following transactions is included while estimating a country's Gross Domestic Product (GDP)? (a) Sale of a second-hand car (b)…Free
- Net Factor Income from Abroad (NFIA) is correctly defined as: (a) Factor income received from abroad minus factor income paid to abroad (b)…Preview
Chapter contents
The NCERT structure, section by section. Open a section to see its questions, then read the concept-first solution.
Meaning and Basic Concepts of National Income
National income is the single most important measure economists use to gauge the size and growth of a country's economy.
Circular Flow of Income
An economy can be pictured as a continuous circular flow between two sets of decision-makers: households, who own factors of production (land, labour, capital, entrepreneurship), and firms, who use th…
Important Aggregates of National Income: GDP, GNP, NDP and NNP
The four most-used aggregates in national income accounting are built up from one another:
Market Price and Factor Cost
The same output can be valued in two different ways, depending on whose point of view is taken:
Methods of Measuring National Income
Because production, income and expenditure are equal in value (Section 2), national income can be measured by adding up any one of the three from every producing unit, income-earner, or spender in the…
Difficulties in Measuring National Income
Estimating national income accurately, especially for a large and diverse economy, faces several genuine practical difficulties:
Per Capita Income, Personal Income and Disposable Income
Per Capita Income (PCI) expresses national income on an average, per-person basis, and is widely used to compare the standard of living across countries or over time:
Exercises
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- Q3Define Gross Domestic Product (GDP) and Gross National Product (GNP). State the formula that connects them.Free
- Q4Distinguish between Gross Domestic Product (GDP) and Net Domestic Product (NDP).Free
- Q5What do you mean by 'market price' and 'factor cost' in national income accounting? Show how National Income at Factor Cost is derived from…Free
- Q6Explain, in brief, the three methods used to measure a country's national income.Preview
- Q7State any four major difficulties faced in measuring the national income of India.Preview
- Q8Distinguish between Personal Income (PI) and Personal Disposable Income (PDI). Why is PDI generally less than PI?Preview
- Q9Why does India's per-capita income remain comparatively low even though its total GDP has been growing rapidly? Explain briefly.Preview
More questions
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- Example 10From the following data, calculate National Income (NNP at Factor Cost): GDP at Market Price = ₹5,000 crore; Consumption of Fixed Capital (D…Free
- Example 11The National Income of a country is ₹12,00,000 crore and its mid-year population is 120 crore. Calculate the Per Capita Income of the countr…Preview
- Example 12A farmer sells wheat worth ₹40 to a miller, who converts it into flour and sells it to a baker for ₹70. The baker bakes bread from the flour…Preview