Difference between National Income and Per Capita Income
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Basis |
National Income |
Per Capita Income |
|---|---|---|
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Definition |
National Income refers to the total value of all goods and services produced within a country’s borders in a specific time period, typically a year. |
Per Capita Income is the average income earned per person in a country during a specific time period, calculated by dividing the total national income by the population. |
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Focus |
National Income focuses on the aggregate economic output of a country, measuring the overall production and income generation within its borders. |
Per Capita Income focuses on the average income level of individuals within a country, providing insights into the standard of living and income distribution among the population. |
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Unit of Measurement |
National Income is typically expressed in monetary terms (e.g., currency units such as dollars or euros) and represents the total value of output generated by all factors of production. |
Per Capita Income is also expressed in monetary terms but is measured on a per-person basis, representing the average income earned by each individual in the population. |
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Calculation |
National Income is calculated by summing up the value added at each stage of production across all sectors of the economy, including agriculture, manufacturing, services, and government. |
Per Capita Income is calculated by dividing the total national income by the total population of the country, providing an average income figure per person. |
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Indication |
National Income indicates the overall economic performance and output of a country, reflecting its production capacity, economic growth, and aggregate demand. |
Per Capita Income indicates the average income level and standard of living of the population, providing insights into income distribution and disparities within the country. |
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Policy Implications |
National Income data helps policymakers formulate economic policies, assess the effectiveness of fiscal and monetary measures, and make decisions to promote economic development and stability. |
Per Capita Income data helps policymakers address issues related to poverty, inequality, and social welfare by targeting interventions and redistributive policies to improve the standard of living for all citizens. |
Difference between National Income and Per Capita Income
National income and per capita income are two important concepts in economics that help us understand the financial health of a country and the wealth of its people. National income is the total value of all goods and services produced within a country’s borders in a year. On the other hand, per capita income is the average income earned by each person in the country during that time. These measures provide insights into the overall economic performance and the standard of living of the population.
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