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Concept of National Income Video Lecture | Business Economics for CA Foundation

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FAQs on Concept of National Income Video Lecture - Business Economics for CA Foundation

1. What is national income?
Ans. National income refers to the total value of all goods and services produced within a country's borders during a specific time period, typically a year. It includes both the income generated by individuals and businesses within the country, as well as any income earned from abroad.
2. How is national income calculated?
Ans. National income is calculated using various methods, including the income approach, expenditure approach, and production approach. The income approach adds up all the incomes earned by individuals and businesses in the country, such as wages, profits, and rents. The expenditure approach calculates national income by summing up all the expenditures on goods and services within the country, including consumption, investment, government spending, and net exports. The production approach measures national income by adding up the value of all goods and services produced in various sectors of the economy.
3. Why is national income important?
Ans. National income is an important economic indicator as it provides insights into the overall economic health and standard of living within a country. It helps policymakers and economists analyze the level of economic development, growth rates, income distribution, and productivity. National income data is also used to formulate and evaluate economic policies, measure the impact of government interventions, and compare the economic performance of different countries.
4. What factors affect national income?
Ans. Several factors influence national income, including the level of investment, government spending, exports and imports, technological advancements, population growth, inflation, and the overall business environment. Higher levels of investment and government spending often lead to increased production and higher national income. Technological advancements can boost productivity and output, contributing to economic growth. Population growth can also impact national income, as a larger workforce can lead to increased production and consumption.
5. How does national income contribute to economic development?
Ans. National income is closely linked to economic development. A higher national income generally indicates greater economic output, higher levels of employment, increased consumer spending, and improved living standards. It provides resources for investment in infrastructure, education, healthcare, and social welfare programs. A growing national income can also attract foreign investment and promote international trade. Ultimately, a higher national income can contribute to sustained economic growth and development.
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