Question

Does increase in domestic income always lead to increase in national income if not give an illustration in support of your answer also write any two solution to accelerate the growth of domestic income

Answer 1

Answer:

no , not always

if net factor income from abroad is zero then the domestic income is equal to national incom

Answer 2

Answer:

Increase in domestic income do not always leads to increase in national income If NFIA is negative

Explanation:

Domestic income is a territorial concept as it includes the value of final goods and service produced within domestic territory of a country.

Domestic income consists of compensation of employees; rent and royalty; interest earned; mixed income and profit.

While National income is a national concept as it includes the value of final goods and services produced in the entire world.

National Income= Domestic Income + NFIA (Net Factor Income from Abroad which we get by subtract factor income to abroad from factor income from abroad)

Increase in domestic income do not always leads to increase in national income If NFIA is negative it means Factor income to abroad is greater than factor income from abroad, it decrease National income.

Solution to accelerate the growth of domestic income by:

1. Increase in the value of compensation of employees by increasing the level of output

2. Increase in profit by providing better goods and service or better quality goods and  service.

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