Q.Explain any four features of national income.
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Start your 14-day free trial to unlock the full solution →Four important features of national income are: (1) it is a flow measured over a year, (2) it is expressed in money terms, (3) it includes only the value of final goods and services (avoiding double counting), and (4) it covers the net output of the normal residents of the country, including net factor income earned from abroad.
Features of National Income
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It is a flow concept — national income is a flow of goods, services and income measured over a period of time, normally one accounting/financial year, rather than a stock measured at a single point of time.
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It is expressed in money value — since a country produces many different kinds of goods and services that cannot be added in physical units, they are all valued and totalled in money terms at their market prices.
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It includes only final goods and services — only the value of final goods and services meant for final use is counted; the value of intermediate goods is excluded to avoid the problem of double counting.
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It measures net output of normal residents — national income refers to the income earned by the normal residents of a country, so net factor income earned from abroad is added; income of foreigners within the country is treated accordingly.
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