Question

Explain any four features of national income.

Explain the features of national income.

Answer 1

1. Macroeconomic concept: National income is a key aspect of macroeconomics, representing the total income generated from all goods and services produced within a country in a given year. It provides an overall assessment of a nation's economic performance during that period.

2. Flow concept: National income is measured as a flow of goods and services produced over a year. Since it depends on economic activities, any fluctuation in production directly impacts national income.

3. Includes only final goods and services: While computing national income, only the value of final goods and services is considered. The cost of intermediate goods, such as raw materials, is excluded to prevent double counting.

4. Money value: National income is always expressed in monetary terms. It represents only those goods and services which are exchanged for money.

5. Financial year basis: In India, national income is calculated by the Central Statistical Organisation (CSO) on an annual basis, following the financial year from April 1st to March 31st.

6. Net income from abroad: National income includes net earnings from foreign trade and investments. It is the difference between income received from exports and investments abroad and payments made for imports and foreign investments. If the net income from abroad is negative, it is deducted from the total national income.

7. Net aggregate value: National income accounts for the net value of goods and services produced within the country but excludes depreciation costs, which refer to the wear and tear of capital assets over time.