Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: National Income Accounting

Question:

Accounting of National Income at constant price is called :

Options:

Nominal Income

Real Income

Domestic Income

GDP Deflator

Correct Answer:

Real Income

Explanation:

The correct answer is Real Income.

Accounting of National Income at constant price is a method of calculating the value of goods and services produced in an economy in a given year, using the prices of a base year. This is done to remove the effects of inflation and allow for a more accurate comparison of economic output over time.

Nominal income, on the other hand, is the value of goods and services produced in an economy in a given year, using the prices of that year. This means that nominal income is not adjusted for inflation, and it can therefore be misleading when comparing economic output across different years.

Domestic income is the total income earned by residents of a country, regardless of where it was produced. This includes income from labor, capital, and property.

GDP deflator is a price index that measures the overall level of prices in an economy. It is used to convert nominal GDP to real GDP.

Therefore, the only option that correctly describes the accounting of National Income at constant prices is Real Income.