Uses of national income

Answer 1

Uses of National Income Data:- 1:National Income as a measure of economic growth - Estimates of national income at constant prices indicate economic growth of a country. 2:National Income as an indicator of success or failure of planning - If a country has adopted planning as a means of economic growth then national income data can help in assessing the achievements of planning. 3: Useful in estimating per capita income - Per capita income is obtained by dividing national income by total population of the country. 4:Useful in assessing the performance of different production sectors - Production units of a country are broadly classified into primary, secondary and tertiary sectors. These sectors generate factor incomes. The data on factor incomes generated by these sectors can be used to measure their relative contributions to national income. 5:Useful in measuring inequalities in the distribution of income - All individuals so not have the same income. It means national income is unequally distributed among people. The extent of inequality in a country can be measured from the national income data collected through the income distribution methods. 6:Useful in measuring standards of income - The expenditure method reveals consumption expenditure and investment expenditure. If the total consumption expenditure is divided by the total investment expenditure we get per capita consumption expenditure which indicates the average standard of living of the people of the country. 7:Makes international comparisons possible - We can compare the economies of any two countries on the basis of their national income data.