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Significance Of Study Of National Income

The Importance of National Income
The study of national income is of paramount importance due to various reasons. The following are the causes, which highlight the significance of the study of national income.
XI Economics Significance Of Study Of National Income

The estimation of national income reveals that where we stand economically. We can know that what amount of quality of goods and services are available to use, what is the disparity between the demand for the supply of the goods and if this situation is alarming, what and where the steps could be taken to come out of it?

Per capital income could be estimated by dividing the national income over the existing population, which reflects the living standard of a country. If the living standard of an American is 40 times higher, it is due to the fact that the per capital income of USA is higher than Pakistan. This fact reveals that how much a country as compared to the other back ward economically and how this backwardness can be predicated.

The estimation of national income tells about the comparative pace of economic development in the country. In other words, whether the population increasing more than or less than proportional increase in the income. The national income should increase with dominating proportion over the increase in population because this indicates that the living standard of a country is improving. This situation suggests that we should make our utmost efforts either to increase the income or to control the population.

two the most important questions with answer (do bohat aham sawal au jawab hai zarror dhekey )

National Income & Various Concept Of National Income (long)

Explain Measurement Of National Income or Explain Measuring GNP (long)

National income estimates reflect an overall performance of the economy. Whether economy is growing, constant or declining

Estimation of National income also reveals the contribution made by different sectors of the economy such as agriculture, manufacturing industry, services and trade etc. Such data is very helpful in economic planning.

National income data serve a very useful guideline to frame economic policy. By looking at the national income figures and facts the policy-makers can decide which of the sectors of the economy need particular incentives to develop.


Budgetary policies play a vital role in economic development of the country as well as economic welfare of the people. National income estimates help in formulating appropriate taxation and borrowing policies, allocating rates of development and non-development expenditure etc.

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