HPSC (Haryana) Exam > HPSC (Haryana) Videos > Crash Course for Haryana Public Service Commission (HPSC) > Economy: National Income - 1
Economy: National Income - 1 Video Lecture | Crash Course for Haryana Public Service Commission (HPSC) - HPSC (Haryana)
FAQs on Economy: National Income - 1 Video Lecture - Crash Course for Haryana Public Service Commission (HPSC) - HPSC (Haryana)
| 1. What is National Income and why is it important for the economy? |  |
Ans. National Income refers to the total value of all goods and services produced in a country over a specific period, usually one year. It is a critical measure as it reflects the economic health of a nation, indicating the standard of living, economic growth, and the overall economic performance. Tracking National Income helps policymakers formulate strategies for economic development and address issues like inflation and unemployment.
| 2. How is National Income calculated? | |
Ans. National Income can be calculated using three primary approaches: the production approach, the income approach, and the expenditure approach. The production approach sums the value of all final goods and services produced. The income approach totals the incomes earned by factors of production, such as wages, rents, interests, and profits. The expenditure approach adds up all expenditures made in the economy, including consumption, investment, government spending, and net exports.
| 3. What are the different components of National Income? | |
Ans. The main components of National Income include:
1. Compensation of Employees: wages and salaries paid to workers.
2. Gross Operating Surplus: profits earned by businesses.
3. Gross Mixed Income: income from self-employment.
4. Taxes less Subsidies on Production and Imports: government revenues minus subsidies.
These components provide a comprehensive view of income generation in an economy.
| 4. What is the significance of the Gross Domestic Product (GDP) in relation to National Income? | |
Ans. Gross Domestic Product (GDP) is a key component of National Income. It measures the total value of all goods and services produced within a country's borders in a given time. While National Income accounts for income earned by residents, GDP focuses on production activity. Analysts often use GDP to gauge economic performance and growth, while National Income gives deeper insights into income distribution and living standards.
| 5. What are the limitations of using National Income as an economic indicator? | |
Ans. Despite its importance, National Income has several limitations as an economic indicator. It does not account for the distribution of income among residents, meaning a high National Income does not necessarily indicate equitable wealth distribution. Additionally, it overlooks non-market transactions, such as household labor and volunteer work, which contribute to societal welfare. National Income also fails to consider environmental factors, leading to potential misinterpretations of economic health.
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Oct 21, 2025
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