Question

national income cannot be a perfect indicator of the country's development why​

Answer 1

Answer:

National indicator cannot be a perfect indicator because:

•National indicator cannot decide the life styles of the people

•economic development will be slower if the population of country relatively expands

•and also along with that national income also increases

MAIN POINT;

•Therefore comparision of economic development between countries with different populations will not be correct

•hence per capita income is used instead of national income....

Answer 2

Notwithstanding the positive points, national income suffers from some shortcomings as a indicator of economic development.

Explanation:

• This cannot be assumed that economic prosperity is increasing,  even if national income  is rising, unless the allocation of wealth is equal.
• An increase in national income may not raise the quality of living. This is because the increase may take place due to increase in spending on things such as defense, which do not impro­ve the living standards. Similarly, an rise in national earnings can be correlated with an increase in undesired externalities such as emissions/pollutions or a reduction in product price, or reduction of natural resources or of merely a higher production of capital goods.
• Not just what is produced, but also how it is generated must be considered. The actual costs, i.e.  ‘pain and sacrifice’ of the "society" may also increase when real national output increases.
• It is not easy to ascertain proper deflators for elimination of the impacts of price changes in underdeveloped nations
• The real wage is rising but unemployment persists because of the rapid population growth. This condition is also not compatible with the development. It is therefore problematic.
• The ‘black economy’ distorts national income figures. This is the name given to work that is not reported to the authorities.
• National income only considers paid activities. They, exclude work & activities of housewives. When these activities rise over a number of years, the official estimates and comparisons over many years do not reflect that.
• Particularly in times of conflict or war the national income  increases as capital is spent on weapons. This would boost GNP, but consumers will be short of  purchasing products.
• While comparing with the past, it is important to make adjustments to allow for inflation. Therefore, it is important while looking at figures to check of they are nominally adjusted, i.e. not to exclude the impacts of inflation.
• Many aspects impact living standard but are not covered by GNP. In recent decades , people have come to enjoy more leisure events, mostly because they are working fewer days. This is not recognized by the national accounts. Likewise, the quality of other goods has increased — a new TV is much better than a long time ago.

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during which period of time is national income calculated explain ...

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