Page 19 - DECO402_Macro Economics

Macroeconomic Theory Dilfraz Singh, Lovely Professional University

Notes Unit-2: National Income : Concept of National Income

Contents
Objectives
Introduction
2.1 Concept of National Income
2.2 Measurement of National Income
2.3 Some Related Aggregates
2.4 Components of National Disposable Income
2.5 Summary
2.6 Keywords
2.7 Review Questions
2.8 Further Readings

Objectives

After the study of this unit, students will be able to :
y To know the concept of national income,
y To know the measurement of national income,
y To know some related aggregates,
y To know components of national disposable income.

Introduction

A person will be considered to live in country, when he does not live outside the country, for one year,
but student who go abroad for study or patient who for treatment, whom these terms and condition
do not apply. If any person, suppose any Indian lives in foreign for more than one year then he will
not considered normal dissident of India, rather he will be considered NRI – Non-Resident Indian.

2.1 Concept of National Income

The common factor between domestic income and national income is that in the range of both
concepts only production factor’s income is included, revenue means (to land), interest (to capital)
profit (to entrepreneur) and wages to employees (to labour). Those factor which are not common to
both concepts, they are as follows:
(i) Whereas domestic income necessarily created in domestic border of the country, but national
income can be created in any part of the world.
(ii) Whereas national income is created by both dissidents of a country and NRI, national income
is created only by dissidents of a country, whom are called the “Normal Residents” of a
country.

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