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Question
Distinguish between.
Personal income and National Income.
Solution
Personal income and National Income.
| Personal Income | National Income |
|
Meaning:
Personal income is the sum of all incomes actually received by an individual or household from all the sources during a given year.
|
The national income is the aggregate monetary value of all final goods and services produced in a country during one year. |
|
Concept:
Study of personal income comes under the microeconomics. It is a microeconomic concept.
|
Study of national income comes under macroeconomics. It is macroevonomic concept. |
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RELATED QUESTIONS
National income
With the increase in income, both consumption and savings increase.
Distinguish between Gross National Product and Net National Product.
Explain the various methods of measuring national income.
In order to avoid double counting, value added approach is used.
Explain various types of investment expenditure.
Explain in detail ‘saving function’ with schedule and diagram.
C = 100 + 0.4 Y is the Consumption Function of an economy where C is Consumption Expenditure and Y is National Income. Investment expenditure is 1.100. Calculate
(i) Equilibrium level of National Income.
(ii) Consumption expenditure at equilibrium level of national income.
Giving reason explain how should the following be treated in estimating national income:
i. Expenditure on fertilizers by a farmer.
ii. Purchase of tractor by a farmer.
If real income is Rs 400 and price index is 105, calculate nominal income.
Explain the precautions that should be taken while estimating national income by expenditure method.
Calculate (a) National Income, and (b) Net National Disposable Income:
| (Rs In crores) | |
| (i) Compensation of employees | 2,000 |
| (ii) Rent | 400 |
| (iii) Profit | 900 |
| (iv) Dividend | 100 |
| (v) Interest | 500 |
| (vi) Mixed income of self- employed | 7,000 |
| (vii) Net factor income to abroad | 50 |
| (viii) Net export | 60 |
| (ix) Net indirect taxes | 300 |
| (x) Depreciation | 150 |
| (xi) Net current transfers to aboard | 30 |
Calculate the (a) Net National product as markets price. and (b) Gross National Disposable Income:
| (Rs In crores) | |
| (i) Mixed income of self – employed | 8,000 |
| (ii) Rent | 400 |
| (iii) Profit | 900 |
| (iv) Dividend | 100 |
| (v) Interest | 500 |
| (vi) Mixed income of self- employed | 7,000 |
| (vii) Net factor income to abroad | 50 |
| (viii) Net export | 60 |
| (ix) Net indirect taxes | 300 |
| (x) Depreciation | 150 |
Other things remaining unchanged, when in a country the price of foreign currency rises, national income is: (choose the correct alternative)
a. Likely to rise
b. Likely to fall
c. Likely to rise and fall both
d. Not affected
Giving reason explain how should the following be treated in the estimation of national income:
Payment of corporate tax by a firm
Giving reason explain how should the following be treated in the estimation of national income:
Purchase of refrigerator by a firm for own use
Calculation National Income and Personal Disposable Income:
| (Rs crores) | ||
| 1 | Rent | 100 |
| 2 | Net current transfers to rest of the world | 30 |
| 3 | Social security contributions by employers | 47 |
| 4 | Mixed income | 600 |
| 5 | Gross domestic capital formation | 140 |
| 6 | Royalty | 20 |
| 7 | Interest | 110 |
| 8 | Compensation of employees | 500 |
| 9 | Net domestic capital formation | 120 |
| 10 | Net factor income from abroad | (-)10 |
| 11 | Net indirect tax | 150 |
| 12 | Profit | 200 |
Giving reason explain how the following should be treated in the estimation of national income:
Payment of interest by a firm to a bank
Giving reason explain how the following should be treated in the estimation of national income:
Payment of interest by a bank to an individual
Giving reason explain how the following should be treated in the estimation of national income:
Payment of interest by an individual to a bank
Calculate the 'National Income' and 'Private Income' :
| (Rs in crores) | ||
| 1 | Rent | 200 |
| 2 | Net factor income to abroad | 10 |
| 3 | National debt interest | 15 |
| 4 | Wages and salaries | 700 |
| 5 | Current transfers from government | 10 |
| 6 | Undistributed profit | 20 |
| 7 | Corporation tax | 30 |
| 8 | Interest | 150 |
| 9 | Social security contributions by employers | 100 |
| 10 | Net domestic product accruing to government | 250 |
| 11 | Net current transfers to rest of the world | 5 |
| 12 | Dividends | 50 |
Calculate 'Net National Product at Market Price' and 'Personal Income'.
| (Rs crore) | ||
| (i) | Transfer payments by government | 7 |
| (ii) | Government final consumption expenditure | 50 |
| (iii) | Net imports | -10 |
| (iv) | Net domestic fixed capital formation | 60 |
| (v) | Private final consumption expenditure | 300 |
| (vi) | Private income | 280 |
| (vii) | Net factor income to abroad | -5 |
| (viii) | Closing stock | 8 |
| (ix) | Opening stock | 8 |
| (x) | Depreciation | 12 |
| (xi) | Corporate tax | 60 |
| Xii | Retained earnings of corporatio | 20 |
Giving reasons explain how should the following be treated in the estimation of national income:
Purchase of uniforms for nurses by a hospital
Calculate investment expenditure from the following data about an economy which is in equilibrium:
National income = 1500
Autonomous consumption expenditure = 300
Investment expenditure = 300
How should the following be treated in estimating the national income of a country? You must give a reason for your answer.
Taking care of aged parents
How should the following be treated in estimating the national income of a country? You must give the reason for your answer
Expenditure on providing police services by the government
Calculate 'Marginal Propensity to Consume' from the following data about an economy which is in equilibrium:
National income = 800
Autonomous consumption expenditure = 100
Investment expenditure = 100
How should the following be treated while estimating national income? You must give the reason in support of your answer.
Addition to stocks during a year
Give reasons or explain the following
The propensity to save depends upon the level of income.
In an economy, S = −100 + 0.6 Y is the saving function, where S is Saving and Y is National Income. If investment expenditure is 1,100, calculate:
(1) Equilibrium level of National Income
(2) Consumption expenditure at equilibrium level of National Income.
C = 50 + 0.5 Y is the Consumption Function where C is consumption expenditure and Y is National Income and Investment expenditure is 2000 is an economy. Calculate
(i) Equilibrium level of National Income.
(ii) Consumption expenditure at equilibrium level of national income.
Write explanatory answer:
Explain the output method of measuring national income.
Fill in the blank using proper alternative given in the bracket:
National income is ........ concept.
Define or explain the following concept.
Disposable income.
State whether the following statement is true or false.
Investment made by the government is autonomous investment.
Define or explain the following concept.
Induced Consumption expenditure.
Fill in the blanks using proper alternatives given in the brackets
Personal Income - Direct Tax = ________________
(b) decreases
(c) becomes equal
(d) becomes zero
Explain the circular flow of national income.
Write Explanatory answer. (Any Two )
What is national income. Explain how national income is mesured by output method
State whether the following statements are TRUE or FALSE:
Saving increases with increase in income.
State whether the following statements are TRUE or FALSE with reason.
National income is a flow concept.
Give reasons or explain the following statement:
The concept of national income has an important place in economic development.
Write explanatory notes.
Output method of measurement of national income.
Give reasons or explain the following statements:
The net national income is less than gross national income.
Answer in brief.
Give different definitions of National Income.
State whether the following statements are True or False with reason:
Ten years period is considered for measuring National Income.
Distinguish between Illegal income and Transfer income.
Answer the following question:
What is double counting of national income?
Answer the following question:
Explain the concept of Gross domestic product at market prices.
Answer the following question:
Explain the income method of measuring national income.
State with reason whether you agree or disagree with the following statement:
Many precautions are to be taken while estimating national income by income method.
State with reason whether you agree or disagree with the following statement:
The money value of intermediate goods is not included in the estimation of national income.
Answer in detail:
Explain the Output method of measuring National income.
Answer in detail:
Explain the 'Final Good Approach' to avoid double counting of goods and services in the estimation of national income.
Distinguish between:
Gross national product and Gross domestic product.
Distinguish between:
Net national product and Net domestic product.
Distinguish between:
Output method of measuring national income and Income method of measuring national income.
Distinguish between:
National income at market prices and national income at factor cost
Write short note on:
Value added approach
Write short note on:
Expenditure method of measuring national income.
Define or explain the following concept:
Personal income
Define or explain the following concept:
Depreciation
Give reason or explain the following statement:
Income from second hand sale of goods is excluded from national income.
Give reason or explain the following statement:
National income estimates are accurate in India.
Give reason or explain the following statement:
Old age pension is transfer income.
Fill in the blank with appropriate alternatives given below
National income is __________ concept.
Fill in the blank with appropriate alternatives given below
Paper purchased by a publisher is __________.
Distinguish between the following.
Personal income and Disposable income
Define the following:
Income from property and entrepreneurship
Identify and explain the following concept:
Shobha collected data regarding the money value of all final goods and services produced in the country for the financial year 2018-2019.
Find the odd word
Concepts of national income -
Assertion and Reasoning type question.
Assertion (A): In national income, value of only final goods and services produced in the economy are considered.
Reasoning (R): National income is always expressed in monetary terms.
- Explain the concept of product (real flow) with the help of above diagram. (2m)
- Explain the concept of Money flow with the help of above diagram. (2m)
PASSAGE
Corona has slowed down the economy Lockdown imposed to contain the spread of Corona virus had resulted in closure of manufacturing and business activities. During this financial year, the economy is expected to move towards a contractionary phase rather than expansionary phase. This has been stated in the budget. This is the first paperless budget in the history of India. At the same time, it is the third post-independence budget to be presented at a time when the economy is shrinking. The budget shows a fiscal deficit of more than 5%.
The Union Finance Minister has presented a budget that seeks to accelerate the economy by balancing the impact of Corona on the economy on one hand and growing expectations of all sectors on the other. A significant increase in the allocation for Healthcare by 137% is a feature of this budget. In this budget, the expected revenue for the year 212-2022 is Rs. 34,35, 000crore and the expected expenditure is Rs. 35,83, 000 crore.
Attempts have been made to boost infrastructure, education, agricultural production, employment generation and industry, but the Income tax status quo has remained the same. The budget provides Rs.16.5 lakh crore for agricultural credit, Rs. 223,000 crore for health facilities, Rs. 3 lakh crore for Power Distribution Scheme, Rs. 15,700 crore for Small and Medium Enterprises and Rs. 20,000 crore for Government Bank Capital.
- What is the percentage increase in the provision for Healthcare? (1 mark)
- Mention the sectors that have been promoted in this budget. (1 mark)
- Express your personal opinion based on the above information regarding the budget ( 2 marks)
Net National product at factor cost is also known as
GNP =______ + Net factor income from abroad.
NNP stands for______.
When net factor income from abroad is deducted from NNP, the net value is______.
The value of NNP at production point is called______.
The average income of the country is______.
What is the difference between NNP and NDP?
Write a short note on per capita income.
Differentiate between personal and disposable income.
Explain the meaning of non-market activities.
Real GNP is same as ______.
Consider the following statements and identify the right ones.
- Personal income refers to the income of individuals of a country.
- The income at their disposal after paying direct taxes is called disposable income.
GNP at MP = ____________.
NNPMP =
NNPFC =
GDP MP = Rs.1000 and subsidies = Rs.50, then GDP FC will be ______.
The market price of all final goods of a country in a year is known as:
Which one is true?
GNPMP =?
Which of the following is correct?
If economic subsidies are added to and Indirect taxes are substracted from the national income at market prices, then it will be equal to ______.
The market value of all final goods and services produced in an economy over a year is called:
If factor cost is greater than marker price, it means that:
Identify and explain the following concept.
Shobha collected data regarding the money value of all final goods and services produced in the country for the financial year 2019-20.
Give economic term:
The volume of commodities and services turned out during a given period counted without duplication.
