What Is National Income?|CBSE

What's National Income? 

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Google says -"the total amount of money earned within a country."

 

Wikipedia says -"A variety of measures of national income and output are used in economics to estimate total economic activity in a country or region."

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What Is Economics?

National Income refers to sum total of factor income earned by normal residents of country during the period of an accounting year. 

Domestic Territory means political frontiers of a country. E.g.- Indian embassy in foreign countries.

Normal Residents refers to an individual or institution who ordinarily resides in a country for a period more than one year and whose centre of economic interest lies in that country. E.g.: Foreign people live in India and settled in the country.

Factor Income Vs. Transfer Income: 

Factor Income refers to income earned by rendering factor services. It is included in National Income. E.g.: Wages and Salaries, Profit,etc.

Transfer Income refers to income earned without rendering any factor services in return. It is not included in National Income. E.g.: Scholarship,etc.                            

Final Goods Vs Intermediate Goods:

Final Goods refers to those goods which are ready for final consumption. Such goods are not further processed. E.g.: Ghee, Sugar,etc. These goods are included in National income.

Intermediate Goods refers to those goods which are to be processed further. These are used as a raw material. Such goods are used in same year or else counted as final goods.

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