8.National Income Accounting and Aggregates-III Flashcards
What is Private Income?
Private Income is the income earned by the private sector, including both earned and unearned income.
How is Private Income calculated?
Private Income = Earned income of the private sector + Unearned income of the private sector (e.g., transfer payments, gifts).
What is private income?
Private income is the income earned by the private sector. It is calculated from NNP at factor cost by making certain additions and deductions.
What are the components of private income?
The components of private income are:
- Wages and salaries
- Rent
- Interest
- Dividends
- Profits
- Transfer payments
What are examples of Unearned Income in the private sector?
Unearned Income in the private sector includes transfer payments like pension, scholarships, gifts, and donations.
How is Private Income calculated using Net National Product at Factor Cost (NNP at FC)?
Private Income = NNP at FC + Transfer Payments + Interest on public debt – Expenditure on Social Security – Profit and Surplus of Public undertakings.
What are the differences between private income and personal income?
The main difference between private income and personal income is that personal income is the income that is actually received by the households, while private income is the income that is earned by the private sector.
How is personal income calculated?
Personal income is calculated by subtracting undistributed corporate profits and taxes on profits from private income.
What components are included in the additions while calculating Private Income?
Additions include transfer payments, remittances, gifts, interest on public debt, and some surpluses.
What components are included in the deductions while calculating Private Income?
Deductions include income from government departments, some surpluses from public undertakings, and employee contributions to social security.
What is personal disposable income?
Personal disposable income is the income that is available for spending or saving after taxes have been paid. It is calculated by subtracting direct taxes from personal income.
What is per capita income?
Per capita income is the average income of the individual people in a country. It is calculated by dividing the national income by the population.
What is Personal Income?
Personal Income is the portion of national income actually received by households before payment of direct taxes in a year.
How is Personal Income derived from National Income?
Personal Income = National Income + Profit taxes + Transfer payments + Interest on public debt - Undistributed Corporate Profits - Tax on Profit
What is the importance of per capita income?
Per capita income is an important indicator of the standard of living of the people in a country. It is used to compare the living standards of different countries and to track the changes in the living standards of a country over time.
How can per capita income be improved?
Per capita income can be improved by increasing the national income and by reducing the population.
What is Personal Disposable Income (PDI)?
Personal Disposable Income is the income that individuals and families actually spend after deducting direct taxes from personal income.
How is Per Capita Income calculated?
Per Capita Income in a specific year = National Income for that year / Population in that year.
What are the limitations of per capita income?
Per capita income has some limitations as an indicator of the standard of living of the people in a country. These limitations include:
- It does not take into account the distribution of income.
- It does not take into account the cost of living.
- It does not take into account the non-monetary benefits that people receive.
How can the limitations of per capita income be addressed?
The limitations of per capita income can be addressed by using other indicators of the standard of living, such as the Gini coefficient and the Human Development Index.
What is money?
Money is any item or medium of exchange that is accepted by people for the payment of goods and services.
What are the different types of money?
The different types of money include:
- Barter money
- Token money
- Metallic money
- Paper currency
- Plastic money
- Digital money
- Crypto currency
What is money?
Money is an item or medium of exchange accepted for payment of goods and services.
What is the barter system?
The barter system involves direct trade of goods and services without using money.
