DIFFERENCE BETWEEN NATIONAL INCOME AND PER CAPITAL INCOME

National income refers to the total income earned by all individuals, companies, and the government within a country’s borders in a given period, usually a year. It includes all forms of income, such as salaries, profits, rent, and interest. National income is calculated by adding up all the income earned by individuals, companies, and the government within the country.
Per capita income, on the other hand, refers to the average income earned by each individual in a given population. It is calculated by dividing the total national income by the total population of the country. Per capita income gives an idea of the standard of living of the people in a country, as it indicates how much income each person has on average.
In summary, national income represents the total income of a country, while per capita income represents the average income of each individual in the country.
Here are the pointwise differences between National Income and Per Capita Income:
1. Definition: National income refers to the total income earned within a country’s borders in a given period, while per capita income is the average income earned per person in a population.
2. Calculation: National income is calculated by adding up all forms of income earned by individuals, companies, and the government within the country’s borders, while per capita income is calculated by dividing the national income by the total population.
3. Size of the Economy: National income represents the size of the economy, while per capita income gives an indication of the standard of living of the people in the country.
4. Economic Growth: National income is used to measure the economic growth of a country, while per capita income is used to measure the economic welfare of individuals.
5. Inequality: National income does not reflect the distribution of income among the population, while per capita income takes into account the distribution of income.
6. Economic Policy: National income is used as a basis for economic policy-making, while per capita income is used to determine the level of economic development of a country.
7. Comparison: National income is used to compare the economic performance of countries, while per capita income is used to compare the standard of living of the people in different countries.
Overall, National Income and Per Capita Income are both important indicators of economic activity and are used to measure different aspects of a country’s economy.

 

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