Definition of national income with example
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For example,if you sum up income of all the working citizens in India, it'll become India's national income. It can also be said India's per capita income. Similarly countries also.
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Meaning :- National Income has been defined in a number of ways. National income is the total market value of all goods and services produced annually in a country. In other way, the total income accruing to a country from economic activities in a year's time is called national income. It includes payments made to all factors of production in the form of rent, wages, interest and profits.
The definitions of national income can be divided into two classes.They are : traditional definitions advocated by Marshall, Pigou and Fisher, and ii) modern definitions.
1) Marshall's Definition : According to Alfred Marshall, "the labour and capital of a country acting on its natural resources, produce annually a certain net aggregate of commodities, material and non-material including services of all kinds. This is the true net annual income or revenue of the country". In this definition, the word 'net' refers to deduction of depreciation from the gross national income and to this income from abroad must be added.
2) Pigou's Definition: According to A.C.Pigou, "National Income is that part of the objective income of the community including of income derived from abroad which can be measured in money". He has included that income which can be measured in terms of money. This definition is better than the Marshallian definition.
3) Fisher's Definition : Fisher adopted consumption as the criterion of national income. Marshall and Pigou regarded it as the production. According to Fisher, "the national income consists solely of services as received by ultimate consumers, whether from their material or from their human environment. Only the services rendered during this year are income".
4) Kuznets' Definition: From the modern point of view, according to Kuznets, "national income is the net output of commodities and services flowing during the year from the country's productive system into the hands of the ultimate consumers".