Which of these activities contributes to India’s national income?
I. Cooking at home
II. A teacher teaching his children at home
III. A doctor prescribing medicines in a clinic
IV. Cooking in a restaurant
(1) I and II (2) II and III
(3) III and IV (4) I and IV
Answers
Explanation:
your answer 2)II and III ✌️
Answer:
{5} ALL OF THE ABOVE
Because:
INCOME :
According to the National Income Committee (1949), “A national
income estimate measures the volume of commodities and
services turned out during a given period counted without
duplication”.
Thus, national income measures the net value of goods and
services produced in a country during a year and it also includes
net earned foreign income. In other words, a total of national
income measures the flow of goods and services in an economy.
In India, National income estimates are related with the financial
year ( April 1 to March 31 ).
Concepts of National Income India
1. Gross Domestic Product ( GDP ) - is the total money value of all
final goods and services produced within the geographical
boundaries of the country during a given period of time.
As a conclusion, it must be understood while domestic product
emphasizes the total output which is raised within the geographical
boundaries of the country; national product focuses attention not
only on the domestic product, but also on goods and services
produced outside the boundaries of a nation. Besides, any part of
GDP which is produced by nationals of a country, should be included
in GNP.
GDP =C+I+G+(X-M)
Gross National Product Formula ( GNP ) : Gross National Product
refers to the money value of total output or production of final
goods and services produced by the nationals of a country during a
given period of time, generally a year.
As we include all final goods and services produced by nationals of
a country during a year in the calculation of GNP, we include the
money value of goods and services produced by nationals outside
the country.
Hence, income produced and received by nationals of a country
within the boundaries of foreign countries should be added in
Gross Domestic Product ( GDP ) of the country. Similarly, income
received by foreign nationals within the boundary of the country
should be excluded from GDP.
In Gross National Product Equation Form :
GNP = GDP + X – M
M = Income received by foreign nationals from within the
country.
If X = M, then GNP = GDP.
Similarly, in a closed economy X = M = 0, then also GNP = GDP
2. Net National Product Formula ( NNP ) : NNP is obtained by
subtracting depreciation value ( i.e., capital stock consumption
) from GNP.
In NNP Equation Form :
NNP at factor cost or National Income = NNP at Market price –
( Indirect Taxes – Subsidy ) = NNPMP – Indirect Tax + Subsidy.
Personal Income : Personal income is that income which is
actually obtained by nationals. Personal income is obtained by
subtracting corporate taxes and payments made for social
securities provisions from national income and adding to it
government transfer payments, business transfer payments and
net interest paid by the government.
In Personal Income Equation Form :
Personal Income = National income – undistributed profits of
Corporations – payments for social security provisions –
-corporate taxes + government transfer payments + Business
transfer payments + Net interest paid by government. It should
always be kept in mind that personal income is a flow concept.
Disposable Personal Income : When personal direct taxes are
subtracted from personal income the obtained value is called
disposable personal income ( DPI ).
In Disposable Personal Income Equation Form :
[Disposal Personal Income] = [Personal Income] – [Direct Taxes].
Symbolically : National Income = Total Rent + Total Wages + Total
Interest + Total Profit.
METHODS OF MEASURING NATIONAL INCOME
According to Simon Kuznets, national income of a country is
calculated by following mentioned three methods :
Product Method : S. Kuznets gave a new name to this method,
i.e., product service method. In this method, net value of final
goods and services produced in a country during a year is
obtained, which is called total final product. This represents Gross
Domestic Product ( GDP ). Net income earned in foreign
boundaries by nationals is added and depreciation is subtracted
from GDP.