Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: National Income Accounting

Question:

National income can be either nominal or real. With the rise in the real national income what happens to the welfare of the people?

Options:

It declines as it indicates the price rise

It rises as it shows the increase in output level 

It remains unchanged as national income is not related with the welfare of society

None of the above

Correct Answer:

It rises as it shows the increase in output level 

Explanation:

Real national income is a true indicator of the health of economy, as it nullifies the affect caused due to rise in price of the commodities. Real national income is measured on constant prices to get a clear picture of the increased output. Now, national income is the income earned by all the people in the country. If it rises, it can be concluded that there will be rise in welfare as well.