National Income and Poverty Measurement

WDR or World Development Report is published by World Bank annually.

National Income is the money value of all final goods and services produced in an economy during a financial year. At the level of an economy, value of final goods and services is equal to the total income of all factors of production viz. labour, capital, land and entrepreneurship.

Per capita income (average income per person) is the most direct indicator of changes in living standards. While GDP measures total economic output, it doesn't account for population growth or distribution. Per capita income reflects what the average person can afford, making it the best standard of living indicator.

This is the correct answer as the domestic chores of a housewife are not included in National Income.

All three statements about Purchasing Power Parity are correct. PPP theory states that exchange rates equalize purchasing power in the long run (1). PPP rates are standard for comparing living standards across countries (2). PPP is grounded in the law of one price, which posits that identical goods should have a single price in efficient markets (3). The question asks which statement is not true, but the correct answer is that all statements are true.

GDP (Gross Domestic Product) measures total output produced within a country, while NDP (Net Domestic Product) subtracts the depreciation of capital goods that occurs during production. This depreciation is called 'Consumption of Fixed Capital' - it represents the wear and tear, obsolescence, or destruction of capital assets (machinery, buildings, infrastructure) used in the production process. The difference GDP - NDP = Consumption of Fixed Capital.

Net National Product (NNP) = Gross National Product (GNP) minus depreciation (capital consumption allowance). Depreciation represents the wear and tear on capital assets during production. Foreign aid, taxes, and indirect taxes are not subtracted to get NNP.

Green Accounting (or Environmental Accounting) incorporates environmental costs like pollution, depletion of natural resources, and ecological damage into national income calculations. Traditional GDP accounting treats environmental destruction as positive economic activity, while green accounting attempts to deduct these costs to measure sustainable development.

Winning a lottery is not included in the National Income of a Country. 

Per capita income (average income per person) is the standard measure of a country's standard of living because it reflects the average economic resources available to individuals. While national income measures total economic output, it doesn't account for population size. Per capita income allows for meaningful comparisons between countries and over time, serving as a key indicator of economic development and individual welfare.

Correct answer is (3). 

GDP and GNP measure total economic output, which doesn't account for population size. Total income also doesn't reflect individual well-being. Per capita income divides total income by population, showing average individual prosperity and better reflecting development impact on people.

GNP stands for Gross National Product, which measures the total economic output of a country's residents including income earned from abroad.

National Income is determined by the total production of goods and services in an economy over a specific period. This measures the actual economic output and value created, rather than revenue collection or expenditure.