4.1.1 Meaning of national income
Definition: National income is the total value of a country's output (or income, or expenditure) over a period, normally one year. Output generates income (wages, rent, interest, profit) and that income is spent on output, so in principle total output = total income = total expenditure.
Example: India's GDP is around US$4 trillion, making it one of the world's five largest economies.
Analysis chain (AO2): Output produced → generates incomes (wages, rent, interest, profit) → incomes spent on output → so output, income and expenditure measures should give the same total.
Evaluation (AO3):
- In practice the three measures differ because of statistical discrepancies, timing and the informal sector.
🔒 Also in the full notes
- 4.1.2 Measurement of national income: GDP, GNI and NNI
- 4.1.3 Adjustment from market prices to basic prices
- 4.1.4 Adjustment from gross to net values
- Exam practice: 4 practice questions
- 1 exemplar answer with full model answers and mark breakdowns
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