Paragraph for national income
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National income was the most suitable indicator of economic development.
It refers to increase in economy’s real national income over a long period of time.
National income can be studied as gross national of product (GNP) or Gross Domestic Product (GDP). Out of the two, GDP is generally preferred to GNP as this gives the true performance of the economy. GDP is calculated excluding of net factor income from abroad. Again between GDP and NDP (Net Domestic Product), the latter is c; tiered as a better measure of development because it makes provision for the depreciation of capital goods in the process of development.
To Calculate GDP, we multiply the quantity of final goods and services with current market price. This is called GDP at current price, when the same is calculated in terms of a price in some past year called the base year, we get GDP at constant price. To measure economic growth, GDP at constant price is a better indicator as it gives us the growth rate in real terms, not in money terms. From GDP at constant price when we deduct depreciation, we get NDP at constant price.
It refers to increase in economy’s real national income over a long period of time.
National income can be studied as gross national of product (GNP) or Gross Domestic Product (GDP). Out of the two, GDP is generally preferred to GNP as this gives the true performance of the economy. GDP is calculated excluding of net factor income from abroad. Again between GDP and NDP (Net Domestic Product), the latter is c; tiered as a better measure of development because it makes provision for the depreciation of capital goods in the process of development.
To Calculate GDP, we multiply the quantity of final goods and services with current market price. This is called GDP at current price, when the same is calculated in terms of a price in some past year called the base year, we get GDP at constant price. To measure economic growth, GDP at constant price is a better indicator as it gives us the growth rate in real terms, not in money terms. From GDP at constant price when we deduct depreciation, we get NDP at constant price.
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