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Economics · Class 12 Commerce

Ch 2National Income — Class 12 Economics, concept-first.

National income is the total money value of all final goods and services produced by the normal residents of a country during a given accounting year, usually a financial year.

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Key concepts

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National-Income Aggregates and Their Relationships

The national-income family — GDP, GNP, NNP, National Income (NNP at factor cost), Personal Income and Disposable Personal Income — is linked by three adjustments.

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Chapter contents

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1

Meaning and Significance of National Income

National income is the total money value of all final goods and services produced by the normal residents of a country during a given accounting year, usually a financial year.

2

The National-Income Aggregates and Their Relationships

National-income accounting uses a family of related aggregates. Moving between them means adding or subtracting three adjustments: depreciation, net indirect taxes, and net factor income from abroad.

3

Methods of Measuring National Income

Because output, income and expenditure are equal for the economy as a whole, national income can be estimated by three methods. India uses a combination of all three across different sectors.

4

Difficulties in Measuring National Income

Estimating national income in a developing economy such as India involves genuine practical problems:

Exercises

+Show 5 questions5 questions
  1. Q6Calculate Disposable Personal Income from: Personal Income = ₹6,000 crore; Personal (direct) taxes = ₹800 crore.Free
  2. Q7GNP at market price is ₹9,000 crore and depreciation is ₹700 crore. Find NNP at market price.Free
  3. Q8Explain the three methods of measuring national income. Why must all three, in principle, give the same figure?Preview
  4. Q9Distinguish between Gross Domestic Product (GDP) and Gross National Product (GNP).Preview
  5. Q10State any four difficulties involved in the measurement of national income in India.Preview

Sample & Board Papers

Sample papers and previous-year board questions for this subject.

+Show 21 questions21 questions
  1. Q1Primary Sector is ________. (a) Construction (b) Industry (c) Trade (d) AgriculturePreview
  2. Q2Give the meaning of National Income.Preview
  3. Q3What do you mean by the term "Personal Income" ?Preview
  4. Q4GDP deflator = ________. (a) Nominal NDP / Real NDP x 100 (b) Nominal GNP / Real GNP x 100 (c) Nominal NNP / Real NNP x 100 (d) Nominal GDP…Preview
  5. Q5Per capita Income is obtained by dividing the National Income by : (a) Expenditure (b) Production (c) GNP (d) Population of a countryPreview
  6. Q6Write the formula for calculating GNP.Preview
  7. Q7Write a short note on per capita income.Preview
  8. Q8Define GDP deflator.Preview
  9. Q9Explain in brief - NNP at factor cost.Preview
  10. Q10(a) Compare the features among Capitalism, Secularism and Mixedism. OR (b) Discuss the various methods of estimating the National Income of…Preview
  11. Q11Income method is measured by summing up of all forms of __________. (a) Expenditure (b) Production (c) Income (d) TaxesPreview
  12. Q12Why is 'self consumption' difficult in measuring National Income ?Preview
  13. Q13Differentiate between Personal and Disposable Income.Preview
  14. Q14Primary sector is __________. (a) Construction (b) Trade (c) Industry (d) AgriculturePreview
  15. Q15Define National Income.Preview
  16. Q16Write a short note on Per Capita Income.Preview
  17. Q17(a) What are the difficulties involved in the measurement of National Income ? OR (b) Explain the differences between Classical theory and K…Preview
  18. Q18Expansion for NNP is : (a) National Net Provident (b) Net National Product (c) Net National Provident (d) National Net ProductPreview
  19. Q19Define GDP deflator.Preview
  20. Q20Give a short note on Expenditure method.Preview
  21. Q21(a) Describe the various methods of estimating National Income of a country. OR (b) State and explain instruments of Fiscal Policy.Preview

More questions

+Show 5 questions5 questions
  1. Example 1From the following data, calculate Gross National Product at market price (GNP-MP): GDP at market price = ₹5,000 crore; Net factor income fr…Free
  2. Example 2Calculate National Income (NNP at factor cost) from the following: GDP at market price = ₹8,000 crore; Net factor income from abroad = ₹(−10…Free
  3. Example 3The national income of a country is ₹12,00,000 crore and its population is 120 crore. Find the per capita income.Preview
  4. Example 4Using the income method, calculate National Income from: Compensation of employees = ₹3,000 crore; Rent = ₹500 crore; Interest = ₹400 crore;…Preview
  5. Example 5From the data, find Gross Domestic Product at market price by the expenditure method: Private final consumption expenditure (C) = ₹4,000 cro…Preview