Q. 14.7( 3 Votes )
Why should National Income be calculated? Give any three reasons.
National income is the total money value of all the goods and services produced in a country during one financial year. It includes only the economic activities that can be valued at economic prices. Such as production by farmers, firms in different industrial sectors, production of goods and services by government, services produced by business intermediaries (Wholesalers and retailers), banks and other financial institutions, educational institutes and professionals like doctors, teachers, lawyers, etc. It should be calculated for the following reasons :
1. National income estimate is important for short-term and long-term planning. It is not possible to make future plans without having any prior knowledge of the past trends of the national income in the country.
2. It helps to know the clear structure of the country. The composition of each sector and its contribution can be easily determined.
3. It helps to compare the standards of living of people in different countries and of people living in the same country at different times.
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