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Economics · Class 11 Commerce

Ch 7National Income — Class 11 Economics, concept-first.

National income is the single most-watched number in macroeconomics — it is the money value of the total goods and services a country produces in a year. For a student preparing for the Andhra Pradesh Intermediate first-year Economics examination, this chapter is the bridge between the micro-level theories of demand, p…

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Concepts

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Key concepts

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Gross Domestic Product and Gross National Product

GDP = money value of all final goods and services produced within the domestic territory of a country in a year, by residents and non-residents alike.

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Chapter contents

The NCERT structure, section by section. Open a section to see its questions, then read the concept-first solution.

1

Meaning and Significance of National Income

National income is the single most-watched number in macroeconomics — it is the money value of the total goods and services a country produces in a year.

2

Basic Concepts: GDP, GNP, NDP and NNP

Gross Domestic Product (GDP). GDP is the money value of all final goods and services produced within the domestic territory of a country during one year, regardless of who owns the factors of producti…

3

Market Price and Factor Cost

The same aggregate (say NNP) can be valued in two different ways depending on whether indirect taxes and subsidies are included.

4

Other Related Aggregates: Personal Income, Personal Disposable Income and Per-Capita Income

National Income (NI) is income earned by factors of production. But not all of it reaches households as spendable cash, and households also receive some income they did not earn by contributing a fact…

5

Methods of Measuring National Income

Because national income can be viewed at three equivalent points in the circular flow of income (output produced → income earned → expenditure incurred), it can be measured by three different methods.…

6

Difficulties in Measuring National Income

Estimating national income accurately is genuinely hard, especially in a developing, partly-unorganised economy like India's.

Exercises

+Show 12 questions12 questions
  1. Q1Which of the following correctly defines Gross Domestic Product (GDP)? (a) Money value of final goods and services produced by a country's r…Free
  2. Q2Distinguish between Gross National Product (GNP) and Net National Product (NNP).Free
  3. Q3What is Net Factor Income from Abroad (NFIA)? How does it convert GDP into GNP?Free
  4. Q4From the following data, calculate (i) GNP at Market Price, (ii) NNP at Market Price, and (iii) National Income (NNP at Factor Cost): GDP at…Preview
  5. Q5A wheat farmer sells wheat worth ₹4,000 to a flour mill. The flour mill grinds it into flour and sells the flour worth ₹6,500 to a bakery. T…Preview
  6. Q6From the following data, calculate National Income by the Income Method: Compensation of Employees = ₹1,80,000 crore; Rent = ₹25,000 crore;…Preview
  7. Q7From the following data, calculate GDP at Market Price by the Expenditure Method: Private Final Consumption Expenditure = ₹3,20,000 crore; G…Preview
  8. Q8National Income of a country is ₹8,00,000 crore. From this, Undistributed Profits of ₹40,000 crore and Corporate Tax of ₹25,000 crore are de…Preview
  9. Q9"National income accounting always understates the true level of economic welfare in a country like India." Examine this statement with refe…Preview
  10. Q10Which method of measuring national income would be most suitable for estimating the contribution of (i) the agricultural sector, and (ii) th…Preview
  11. Q11In the value-added method, a chemical factory's own effluent pollutes a nearby river, damaging fish stocks that local fishermen depend on. E…Preview
  12. Q12Government reduces the GST rate on a good and simultaneously introduces a new subsidy for its producers. Explain how each change separately…Preview

Sample & Board Papers

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

+Show 14 questions14 questions
  1. Q1Define National Income and explain the various concepts of National Income.Preview
  2. Q2What is the relationship between population and per capita income?Preview
  3. Q3Define National Income and explain the various methods of calculating National Income.Preview
  4. Q4What is National Income at factor cost ?Preview
  5. Q5Write a short note on: Disposable incomePreview
  6. Q6Explain the various methods of calculating National Income.Preview
  7. Q7What are the factors that determine National Income ?Preview
  8. Q8Write a short note on: Intermediary goodsPreview
  9. Q9Write a short note on: Per Capita IncomePreview
  10. Q10Write a short note on: Disposable IncomePreview
  11. Q11Explain the various methods of calculating National Income.Preview
  12. Q12What are the factors that determine National Income?Preview
  13. Q13Write a short note on: Disposable IncomePreview
  14. Q14Write a short note on: Per Capita IncomePreview