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Chapter 11
Chapter 11
Chapter 11
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Social Science II
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11 NATIONAL INCOME
NATIONAL
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You have studied the circular flow of production of the country. When we express
economic activity which shows the relationship the value of these goods and services in terms
between production and consumption in an of money, we get national income. Now, can
economy. Continuous increase in production you give a definition to national income?
can be considered as an index of progress that
z
an economy has achieved. This increase in
production will naturally promote the growth
of National Income. Now examine the total J.M.Keynes, a famous economist defined
income of a nation or national income, methods national income as follows.
of calculating it and the difficulties involved "National Income is the money value
in it. of all goods and services produced in
What is National Income? a country during a year"
Hope you know the factors of production While family income reflects the economic
exchanged by house holds and the resulting position of households, national income shows
reward. Fill up the following table. the economic position of a nation. The basic
Factors of production Reward objective of an economy is to achieve
economic progress. This is achieved by co-
z Land z Rent
ordinating natural resources, human resources,
z z capital, technology etc. National income will
z z
help to assess and compare the progress
achieved by a country over a period of time.
Annual income of a family is the sum total Let us see why the study of national income is
of income it receives from various sources given so much importance.
during a year. It is on this basis that the
z To estimate economic development.
economic position of a family is determined.
z To know how far development objectives
Therefore, when we calculate the annual
were achieved.
income of a nation, naturally we have to take
into account the income from various sectors. z To know the contribution of various
What are the productive sectors? sectors to national income.
z
z Agricultural sector
Try to find out more points.
z
Methods of calculating National Income
These sectors produce innumerable items
of goods and services ranging from ball pins National Income calculation is not an easy
to space shuttles during a year. The sum total task. For this, we have to collect more facts
of these goods and services is the gross and figures. We have already seen that income
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Social Science II
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This method helps us to find out Any one of the above methods can be
contributions of various sectors to national used for calculating national income.
income. Production method = Income
Income Method method = Expenditure method.
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Social Science II
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Prepare line graph, bar diagram, pie You might have heard about indirect taxes
diagram, histogram etc. by using the information and subsidies. Sales tax is an example for
given in the table and after giving suitable indirect tax. This is collected by adding tax to
colours exhibit them in your class room. the price of commodities. Then if you want to
Gross National Product and National know the original price, you have to deduct
Income (GNP & NI) sales tax from the selling price of the
commodity.
We have seen that gross national product
is the sum total of goods and services You might have noticed that Handloom
produced in a country during a year. There and Khadar products were given rebate during
are several stages in arriving at national income festival seasons like Onam, Christmas and
from gross national product. Bakrid. Say 20% rebate is given for handloom
products. What do you mean by this?
Net National Product
z Goods worth Rs.100/- is given to the
Assume that you have bought a bicycle consumer for Rs.80/-
worth Rs.2,500/- Will you get the same
amount for the bicycle, if you sell it after two z The balance of Rs.20/- is given by the
years? What are the reasons for this? Government as subsidy.
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Social Science II
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SUMMARY
z National Income is the money value of the total goods and services
produced in a country during a year.
z Product method, Income method and Expenditure method are the three
methods used for national income calculation.
z Net National Product, Per Capita Income etc., are some of the important
concepts related to National Income.
QUESTIONS
e
om
Inc
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3. Which method is used to find out the contributions made by various sectors
to national income? How is national income calculated by this method?
4. Which method is used to find out the contribution of factors of production
to national income? Explain.
5. National Income calculation is a difficult task. Substantiate.
6. Population growth adversely affects the growth of national income. What
are the other factors?
7. Suggest some measures for increasing national income.
8. How are Net National Product and National Income are calculated from
Gross National Product?
9. Write short notes on
z National Income
z National income calculation in India
z Personal Income
10. When production method is followed, we take goods and services
produced in various sectors. Categorise the following among the three
productive sectors.
z Health z Manufacturing
z Hotel z Mining
z Public Administration z Electricity
z Forest z Transport
z Trade z Agriculture
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