Per capita income of a country is calculated as
- A.national income divided by the total population
- B.national income divided by the working population
- C.national income multiplied by the growth rate
- D.the total savings of households in a year
Correct answer
Explanation
The correct answer is A. Per capita income is the average income of a person in a year, found by dividing national income by the entire population, including children and those who do not work. It is used to compare living standards between countries and between states, and it improves only when income grows faster than the population.
Option B would give income for each worker, a different measure altogether, since the whole population shares the income earned. Option C mixes up a level with a rate of change and produces no meaningful figure. Option D describes household savings, which are a part of income that is not consumed. Remember that per capita income is an average and hides inequality: two countries with the same per capita income can have very different patterns of distribution.
Read the full article: GDP and National Income: Concepts, Methods and Formulas
Practice Questions
View allGross Domestic Product (GDP) is the value of all final goods and services produced
- A.by the residents of a country, wherever they may be
- B.within the domestic territory of a country in a year
- C.by the government sector alone in a year
- D.including intermediate goods used in production
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GDP measures production inside the borders of a country in one accounting year, whoever the producer may be. A foreign firm making cars in India adds to India's GDP, because the test is the place of production and not the nationality of the producer.
Read the full explanation →Gross National Product (GNP) is equal to which of the following?
- A.GDP + net factor income from abroad
- B.GDP - depreciation
- C.GDP + indirect taxes
- D.GDP - subsidies
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Net factor income from abroad is the income residents earn outside the country minus the income foreigners earn inside it.
Read the full explanation →Net National Product (NNP) is obtained by subtracting which item from Gross National Product?
- A.Indirect taxes
- B.Depreciation
- C.Subsidies
- D.Net factor income from abroad
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Machines, buildings and vehicles wear out as they are used, and the value of that wear and tear must be set aside if the country is to keep its capital intact.
Read the full explanation →Who made the first estimate of the national income of India?
- A.V. K. R. V. Rao
- B.P. C. Mahalanobis
- C.Dadabhai Naoroji
- D.D. R. Gadgil
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He made the earliest estimate of India's national income in the nineteenth century and used it to argue that British rule was draining wealth out of the country, putting the average income at about twenty rupees a person a year.
Read the full explanation →The National Income Committee, set up by the Government of India in 1949, was chaired by
- A.P. C. Mahalanobis
- B.Dadabhai Naoroji
- C.V. K. R. V. Rao
- D.C. Rangarajan
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The committee was appointed in 1949 to prepare official estimates of national income after independence, and it submitted its final report in 1954.
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