National Income Measurement Quiz

Gross National Product (GNP) is the total value of goods and services produced and income received in a year by domestic residents of a country. It includes profits earned from capital invested abroad. GNP is significant in measuring national income as it provides a comprehensive view of the economic output and income earned by the residents of a country, both domestically and internationally.

Per Capita Income (PCI) is an indicator to show the living standard of people in a country. It is obtained by dividing the National Income by the population of a country. PCI holds significance in evaluating the standard of living as it provides an average income figure per person, allowing for comparisons of living standards across different countries and over time.

The relationship between Gross Domestic Product (GDP) and Net Domestic Product (NDP) is given by the equation: $NDP = GDP - Depreciation$. NDP is obtained from GDP by deducting the quantum of tear and wear expenses (depreciation), which gives a more accurate representation of the net economic output after accounting for depreciation.

Net National Product (NNP) is arrived at by deducting the value of depreciation from Gross National Product. The adjustment is made using the equation: $NNP = GNP - Depreciation$. This adjustment accounts for the wear and tear of capital goods, providing a more accurate measure of the net economic output and income received by domestic residents.

Personal income (PI) is the total money income received by individuals and households of a country from all possible sources before direct taxes. It is relevant in assessing the income received by individuals and households as it provides a comprehensive measure of the income available for consumption and savings, giving insights into the financial well-being of the population.