Differentiate between national income and per capita income.
Economics
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ChatGPT
1 day ago
National income refers to the total income earned by all individuals and businesses within a country over a specific period of time, usually a year. It includes all forms of income such as wages, profits, rents, and interest.
Per capita income, on the other hand, is calculated by dividing the total national income of a country by its population. It represents the average income earned by each individual in the country. Per capita income is often used as a measure of the standard of living and economic well-being of a country's residents.
In summary, national income measures the total income generated within a country, while per capita income measures the average income earned by each individual in that country.
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Google Gemini AI
1 day ago
National Income
- Definition: The total monetary value of all final goods and services produced within a country's borders during a given period, usually a year. - Components: Includes all income generated by individuals and businesses within the country, including wages, salaries, profits, and capital gains. - Measurement: Calculated using the Gross Domestic Product (GDP), which measures the value of all domestic production.
Per Capita Income
- Definition: The average income of each individual within a country. - Calculation: National income divided by the total population of the country. - Purpose: Indicates the standard of living and economic well-being of the average citizen.
Key Differences
- Scope: National income measures the overall economic output of a country, while per capita income measures the average income of its citizens. - Methodology: National income is measured using GDP, while per capita income is calculated by dividing national income by population. - Interpretation: National income indicates the overall economic size and health of a country, while per capita income provides insights into the distribution of wealth and the economic well-being of its citizens.
Importance
National income:
- Basis for economic policymaking and fiscal planning. - Indicator of economic growth and development. - International comparison of economic performance.
Per capita income:
- Measure of living standards and economic well-being. - Tool for assessing poverty and inequality. - Significant factor in determining the human development index of a country.