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Consider the following statements:
1. When we divide Net Domestic Product by the total population of a nation we get the per capita income of that nation.
2. Higher the rates of depreciation lower the per capita income of the nation.
Which of these statements is/are correct?
- a)1 Only
- b)Both 1 and 2
- c)2 Only
- d)Neither of the above
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
Consider the following statements:1. When we divide Net Domestic Produ...
Explanation:
Per Capita Income:
- It is the average income earned per person in a given area (nation, region, city, etc.).
- It is calculated by dividing the total income earned in the area by the total population of that area.
- Per capita income is an important measure of the economic well-being of a nation or region.
Statement 1:
"When we divide Net National Product by the total population of a nation we get the per capita income of that nation."
- This statement is correct.
- Net National Product (NNP) is the total income earned by a nation's residents (including income earned abroad) minus any depreciation of capital.
- Dividing NNP by the total population gives us the per capita income of the nation.
Statement 2:
"Higher the rates of depreciation lower the per capita income of the nation."
- This statement is also correct.
- Depreciation is the decrease in value of capital goods (machinery, equipment, buildings, etc.) due to wear and tear, obsolescence, etc.
- Higher rates of depreciation mean that the capital stock (total amount of capital goods in the economy) is decreasing at a faster rate.
- This leads to lower productivity and lower output, which in turn leads to lower income.
- Thus, higher rates of depreciation lower the per capita income of the nation.
Conclusion:
- Both statements are correct.
- Statement 1 explains how per capita income is calculated.
- Statement 2 explains one of the factors that affect per capita income.
Per Capita Income:
- It is the average income earned per person in a given area (nation, region, city, etc.).
- It is calculated by dividing the total income earned in the area by the total population of that area.
- Per capita income is an important measure of the economic well-being of a nation or region.
Statement 1:
"When we divide Net National Product by the total population of a nation we get the per capita income of that nation."
- This statement is correct.
- Net National Product (NNP) is the total income earned by a nation's residents (including income earned abroad) minus any depreciation of capital.
- Dividing NNP by the total population gives us the per capita income of the nation.
Statement 2:
"Higher the rates of depreciation lower the per capita income of the nation."
- This statement is also correct.
- Depreciation is the decrease in value of capital goods (machinery, equipment, buildings, etc.) due to wear and tear, obsolescence, etc.
- Higher rates of depreciation mean that the capital stock (total amount of capital goods in the economy) is decreasing at a faster rate.
- This leads to lower productivity and lower output, which in turn leads to lower income.
- Thus, higher rates of depreciation lower the per capita income of the nation.
Conclusion:
- Both statements are correct.
- Statement 1 explains how per capita income is calculated.
- Statement 2 explains one of the factors that affect per capita income.
Community Answer
Consider the following statements:1. When we divide Net Domestic Produ...
- When we divide NNP (Net National Product) by the total population of a nation we get the 'per capita income' (PCI) of that nation, i.e., ‘income per head per year'.
- A very basic point should be noted here that this is the point where the rates of depreciation followed by different nations make a difference.
- Higher the rates of depreciation lower the PCI of the nation (whatever be the reason for it logical or artificial as in the case of depreciation being used as a tool of policy making).
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Consider the following statements:1. When we divide Net Domestic Product by the total population of a nation we get the per capita income of that nation.2. Higher the rates of depreciation lower the per capita income of the nation.Which of these statements is/are correct?a)1 Onlyb)Both 1 and 2c)2 Onlyd)Neither of the aboveCorrect answer is option 'B'. Can you explain this answer?
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Consider the following statements:1. When we divide Net Domestic Product by the total population of a nation we get the per capita income of that nation.2. Higher the rates of depreciation lower the per capita income of the nation.Which of these statements is/are correct?a)1 Onlyb)Both 1 and 2c)2 Onlyd)Neither of the aboveCorrect answer is option 'B'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements:1. When we divide Net Domestic Product by the total population of a nation we get the per capita income of that nation.2. Higher the rates of depreciation lower the per capita income of the nation.Which of these statements is/are correct?a)1 Onlyb)Both 1 and 2c)2 Onlyd)Neither of the aboveCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements:1. When we divide Net Domestic Product by the total population of a nation we get the per capita income of that nation.2. Higher the rates of depreciation lower the per capita income of the nation.Which of these statements is/are correct?a)1 Onlyb)Both 1 and 2c)2 Onlyd)Neither of the aboveCorrect answer is option 'B'. Can you explain this answer?.
Consider the following statements:1. When we divide Net Domestic Product by the total population of a nation we get the per capita income of that nation.2. Higher the rates of depreciation lower the per capita income of the nation.Which of these statements is/are correct?a)1 Onlyb)Both 1 and 2c)2 Onlyd)Neither of the aboveCorrect answer is option 'B'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements:1. When we divide Net Domestic Product by the total population of a nation we get the per capita income of that nation.2. Higher the rates of depreciation lower the per capita income of the nation.Which of these statements is/are correct?a)1 Onlyb)Both 1 and 2c)2 Onlyd)Neither of the aboveCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements:1. When we divide Net Domestic Product by the total population of a nation we get the per capita income of that nation.2. Higher the rates of depreciation lower the per capita income of the nation.Which of these statements is/are correct?a)1 Onlyb)Both 1 and 2c)2 Onlyd)Neither of the aboveCorrect answer is option 'B'. Can you explain this answer?.
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