Macroeconomics
Type of income that is not included in national income.
We can give an example of income that is not included in the national income. They are
transfer payment and capital gains.
transfer payment at those which a person receives either from government or from any
private or individual without participating in any productive work. Different types of
social security contributions by the government like unemployment assistance are
example of transfer income.
Transfer income are not added in national income for example begger's income is
transfer income on the other hand the concept of capital gain arises when a person
purchase an asset ( land, house, ornament) at a certain price in the past and sales it in
future at relatively higher price the gains that he makes out of it is called capital gains
since the person has not rendered any productive activity to get this money also it is his
personal income it should not be added in national income this are all example of
income received not income earned.
Distinguish between gross domestic product and gross national
product (GDP & GNP)
When we define GDP it is important that production should be made within the
national boundary of nation it does not matter whether the factors of production are of
domestic origin or not but when we define GNP it is important that production should
be made with domestically owned factors of production it does not matter whether the
production has taken place. For example Suppose an Indian citizen perform a
productive activity in US and earn some money now this income will be added in
India's GNP because the person is an Indian by origin but this income should not be
part of India GDP because the production has takes place in US so, that income will be
counted as US GDP.
Type of income that is not included in national income.
We can give an example of income that is not included in the national income. They are
transfer payment and capital gains.
transfer payment at those which a person receives either from government or from any
private or individual without participating in any productive work. Different types of
social security contributions by the government like unemployment assistance are
example of transfer income.
Transfer income are not added in national income for example begger's income is
transfer income on the other hand the concept of capital gain arises when a person
purchase an asset ( land, house, ornament) at a certain price in the past and sales it in
future at relatively higher price the gains that he makes out of it is called capital gains
since the person has not rendered any productive activity to get this money also it is his
personal income it should not be added in national income this are all example of
income received not income earned.
Distinguish between gross domestic product and gross national
product (GDP & GNP)
When we define GDP it is important that production should be made within the
national boundary of nation it does not matter whether the factors of production are of
domestic origin or not but when we define GNP it is important that production should
be made with domestically owned factors of production it does not matter whether the
production has taken place. For example Suppose an Indian citizen perform a
productive activity in US and earn some money now this income will be added in
India's GNP because the person is an Indian by origin but this income should not be
part of India GDP because the production has takes place in US so, that income will be
counted as US GDP.
