UNIT II
QUESTION BANK
Q1) What are the components of GNP?
Ans. Indirect taxes have been eliminated and solid subsidies. In addition, NNP generates national income at base prices. After this, the national income ,Retained earnings, corporate tax, social security ,Contribution and household income.Government we will also send money to your household. In addition, we earn personal income. In the case of income tax when deducted, you get an individual's disposable income.
Is GDP a good measure of welfare?
- Consumer surplus;
- Externalities (positive and negative).
- Non-market exchanges (housework, underground Economy);
- Depreciation of capital (physical, human and environment);
- Inflation, changes in quality.
- Exchange rate, PPP
- Inequality.
- Keep up with Jones.
- Happiness.
Q2 . Explain Net Gross National Product
Ans. Net Gross Domestic Product:
Subtracting renewal, repair, and obsolescence depreciation from GNP gives you gross national product at market prices. Therefore:
GNP at MP – Depreciation = NNP at Market Price
Depreciation is the loss of value that a country's fixed capital (buildings, machinery, equipment, etc.) inventory suffers from wear and tear. The issue of valuing the depreciation of capital stock is one of the most annoying issues in the field of national accounts. The convention was to accept business records as a measure of depreciation without having to re-estimate in terms of current replacement costs. Therefore, a purely domestic product means the market value of all final goods and services after depreciation. The big advantage of the NNP concept is that it reveals a net increase in total production, in addition to current consumption and current alternative investments. This means a long-term improvement in the physical productivity of capital. The concept of NNP has the great advantage of showing a net increase in total products. It emphasizes the long-term importance of maintaining the productivity of the economy. Therefore, it is very useful for researching economic growth.
Q2) What are the main components of national income at factor cost?
Ans. The main components of national income at factor cost are:
- All wages, salaries, and supplementary income earned by employees for the productive services provided, and
- Interest paid to individuals plus
- Net rent for all individuals. Including attribution payments such as rent for private housing
- Income of individual businesses such as farmers, partnerships, professionals such as lawyers, net income of corporations including dividend payments, undistributed income and net income of all types of businesses including corporate tax Minus
- Transfer payments, that is, income payments that do not provide productive services in return. In other words, these are not payments for the production of goods or services, but state or similar public payments from one individual to another, such as interest paid on national debt, social security payments (such as unemployment allowances and old ones). Represents the transfer of income through a target institution (age pension), etc
These remittance payments must be deducted from the total national income determined by adding the total payments made to the factor of production. In addition to the concept of net national income, it is useful to have ideas for certain other income concepts needed for a particular purpose.
Q3) Write down the steps involved in calculating personal income.
Ans. The steps involved in calculating personal income are displayed as follows:
- National income
- Small corporate profit
- Employers' contribution to social insurance is small
- Plus government. Money transfer
- Plus business transfer payment
- Plus net interest paid by the government
- Plus interest paid by consumers
- Plus dividend
- Employees' contribution to social insurance is small
- Equal to personal income
- Disposable income:
Personal income as defined above is not income that a person has the full command to spend, save, or give in any way he or she likes. Income tax and national insurance premiums are mandatory payments and must be deducted in order to obtain what is called personal disposable income.
This income also includes fixed commitments such as contributions such as pensions and installment payments for employment purchases to further reduce individual disposable income.
Therefore, disposable personal income is obtained by deducting personal tax from personal income. These personal taxes are in the form of income tax, wealth tax, expenditure tax and occupational tax. Disposable income consists of personal spending and personal savings.
Disposable income = personal income – personal tax = personal consumption + personal savings.
The concept of disposable income is especially useful in estimating the expected demand for goods and services for personal use by individuals. In times of national emergencies and shortages, this concept helps predict the gap between available supplies and expected demand for goods and services.
Q4) How do we measure national income?
Ans. The output approach focuses on finding the total output of a country by directly finding the total value of all goods and services produced by the country.
Due to the complexity of multiple stages in the production of a good or service, only the ultimate value of the good or service is included in the total production. This avoids a problem called "double counting" where the total value of goods is included several times in a country's production by repeatedly counting at several stages of production. In the meat production example, the value of goods from a farm could be $ 10, then $ 30 from a butcher, and $ 60 from a supermarket. The value that should be included in the final national production should be $ 60, not the sum of all these numbers, $ 100. The added values at each stage of production compared to the previous stage are $ 10, $ 20, and $ 30, respectively. The sum of them provides another way to calculate the value of the final output.
The main formulas are:
- GDP (Gross Domestic Product) at market price = production value in a particular year's economy minus intermediate consumption
- GDP at Factor Cost = GDP at Market Price-Depreciation + NFIA (Net Factor Revenue from Overseas)-Net Indirect Tax (GNP)
- NDP at Factor Cost = Employee Compensation + Net Interest + Rental and Loyalty Income + Income and Unincorporated NDP Profit at Factor Cost
Spending
The spending approach is basically an output accounting method. It focuses on finding the country's total production by finding the total amount spent. This is acceptable to economists, as the sum of all commodities, as well as income, is equal to the total amount spent on the commodities. The basic formula for domestic output is to take all the various fields in which money is spent in the region and combine them to obtain the total output.
{\ displaystyle \ mathrm {GDP} = C + G + I + \ left (\ mathrm {X} -M \ right)} {\ mathrm {GDP}} = C + G + I + \ left ({\ mathrm { X}} -M \ right)
Where:
C = consumption household expenditure / consumption expenditure personal
I = total private sector investment
G = Government consumption and total investment expenditure
X = total export of goods and services
M = Total import of goods and services
Note: (X-M) is often described as XN or NX, both representing "net exports".
The name of the measure consists of either the word "Gross" or "Net", the word "National" or "Domestic", or the word "Product", "Income", or "Expenditure". Will be done. ". All of these terms can be explained individually."Gloss" means the entire product, regardless of its subsequent use. That is, the depletion or obsolescence of a country's fixed capital assets. The "net" indicates the amount of product that is actually available for consumption or new investment.
"Domestic" means that the boundaries are geographical. That is, it counts all goods and services produced within the border, regardless of who they are.
"Nationality" means that boundaries are defined by citizenship (nationality). We count all goods and services produced by the people of the country (or the companies they own), regardless of where their production physically takes place.
The production of French-owned cotton factories in Senegal is counted as part of Senegal's national figures, but as part of France's national figures.
"Product," "Income," and "Expenditure" refer to the three counting methods described earlier: the product, income, and expenditure approach. However, these terms are used loosely.
"Product" is a general term and is often used when one of the three approaches is actually used. The word "product" may be used, followed by additional symbols or phrases to indicate the methodology. So, for example, you get structures such as "Gross Domestic Product", "GDP (Income)", and "GDP (I)".
"Income" here is the income approach was used.
"Expenditure" specifically means that the spending approach was used.
Note that in theory, all three counting methods give the same final number. However, in reality, there are subtle differences from the three methods for several reasons, such as inventory level changes and statistical errors. For example, one problem is that an in-stock item has been produced (and therefore included in the product) but not yet sold (and therefore not yet included in the expenditure). Similar timing issues are due to the value (product) of the product produced and the factors that produced it, especially when the input is purchased with credit and wages are often collected after a period of time. Of production that can cause slight discrepancies between (income).
Q5) Define National Income.
Ans. Fisher ' s definition:
Fisher adopted "consumption" as the standard for national income, while Marshall and Pigot considered it production. "
It's a flaw:
- However, from a practical point of view, this definition is less useful, because there are certain difficulties in measuring goods and services in terms of money. First, it is much more difficult to estimate the monetary value of net consumption than to estimate the monetary value of net production.
- In a country, there are several people who consume specific goods in different places, so it is difficult to estimate their total consumption. Secondly, some consumer goods are durable and can be used for many years.
- If we consider the example of a piano or coat given by Fisher, then only the services they provide within a year will be included in the income. If the coat costs Rs. 100 and lasting ten years, Fisher will consider only rupees. 100 as a year's national income, while Marshall and pigo will include rupees. 100 in the year of national income, when it is made.
- In addition, it is not safe to say that this coat can only be used for ten years. It may last longer or for a shorter period of time. Third, durable goods are often constantly changing, resulting in changes in ownership and value as well.
- Therefore, from a consumption point of view, it is difficult to measure the value of the services of these goods in money. For example, the owner of the Maruti car sells it at a price higher than its actual price, and the purchaser sells it further at the actual price after using it for several years.
- The question now is, Should we consider its price, whether real or black market price, and then when it moves from one person to another, its value should be included in national income according to its average age?
- But the definition proposed by Marshall, Pigot, and Fisher is not entirely flawless. However, Marshallian and Pigovian definitions tell us what affects economic well-being, while Fisher's definition helps us compare economic well-being over different years.
Modern definition:
From a modern point of view, Simon Kuznets defines national income as"the net output of goods and services that flow from the national production system into the hands of the end consumer in a year."”
On the other hand, in a United Nations report, national income is determined on the basis of a system of estimates of national income, as a net national product, as a supplement to the share of different factors, and as a country & apos; s net national expenditure over a period of one year. In fact, while estimating national income, any of these three definitions could be used, because if different items were correctly included in the estimate, the same national income could be derived
Q6) What are the important assumptions of national income?
Ans. Important assumptions are:
• Prices and wages are fixed in the short term
• Changes in resources and total spending during unemployment
• It is reflected in changes in output and income.
• But in the long run, wages and prices are flexible.
• Therefore, the change in total spending
• It leads to price level changes, but not output.
• We will only look at short-term fluctuations, not long-term fluctuations growth.
Income generation
• Consumption depends on income.
• Suppose 40% of each pound of income is spent on Consumer Goods: C = 0.4Y
• Companies spend £ 20 on investment goods: I = 20
• National income is 100.
• This is in equilibrium. Withdrawal = Savings = 20 = Injection = Investment = 20
• Planned total demand = total revenue Unbalance
Solving for equilibrium
• Planned spending = income level of income
• Planned spending = C + I = 0.4Y + I
• Setting this equal to income Y gives:
Y = 0.4Y + I, so
Y = I / (1-0.4) = 5I
• The multiplier is 10 = 1 / 0.1 = 1 / marginal propensity to save.
Adjustment Process
• How much income increases when autonomous Increased spending is determined by the multiplier (Richard Kahn, 1931).
• Companies that produce investment goods as I increase Run out of their stock.
• This will increase production over the next period (Equal demand in the previous period).
• Earn extra income and use it for consumers Being a commodity, retailers' inventory is reduced, which triggers them To order more from the manufacturer
Q7) What do you mean by national income at factor cost?
Ans. Net national income at factor cost:
When a factor of production is produced, the factor of production is paid in form or wage, interest and profit on rent. NNI is the sum of all income payments made to the factor of production. The sum of goods and services for the year is produced by the cooperation of the factors of production, so their monetary value is also distributed to the factors of production.
Therefore, national income can also be regarded as the total or income received by the person who provides the factor of production or the services and resources used for production. These payments take the form of wages, rent, interest and profits.
Q8) What are the major formulas to calculate national income?’
Ans. The main formulas are:
- GDP (Gross Domestic Product) at market price = production value in a particular year's economy minus intermediate consumption
- GDP at Factor Cost = GDP at Market Price-Depreciation + NFIA (Net Factor Revenue from Overseas)-Net Indirect Tax (GNP)
- NDP at Factor Cost = Employee Compensation + Net Interest + Rental and Loyalty Income + Income and Unincorporated NDP Profit at Factor Cost
Q9) Explain the basic problems of National income.
Ans. National Income in India and its problem:
1. Definition drawback,
2. Lack of enough knowledge,
3. Non-availability of reliable info,
4. Technique choice,
5. Lack of differentiation in economic operate,
6. Double count.
What a fastidiously calculable national have the benefit of each country. A number of these difficulties square measure listed below:
(1) Definition problems:
What ought to be enclosed in national income? Ideally, you must embody all the products and services made within the course of the year, however there also are services that don't seem to be calculated in terms of cash, for instance, the services of housewives.
(2) Lack of enough data:
The lack of adequate applied math knowledge makes the task of estimating value a lot of serious and troublesome.
(3) Inability to get reliable information:
The reason for illiteracy is that the majority producers don't have a plan of the number and price of their output and don't follow to apply of maintaining a standard account.
(4) Technique choice:
Whereas scheming value technique selection is additionally a vital issue. The incorrect method has unhealthy consequences.
(5) Lack of differentiation in economic function:
In all countries, skilled specialization continues to be incomplete, there's an absence of differentiation in economic functions. People will receive financial gain partially from agricultural possession and partially from manual add the trade throughout the loose season.
(6) Double count:
Double enumeration is additionally a vital issue once scheming value. If the worth of all product and services is summed up, some product square measure currently used and consumed within the manufacture of different things, therefore the best thanks to avoid this error once the add overtakes the output of the country is to calculate solely the worth of products and services that enter the ultimate consumption.
UNIT II
QUESTION BANK
Q1) What are the components of GNP?
Ans. Indirect taxes have been eliminated and solid subsidies. In addition, NNP generates national income at base prices. After this, the national income ,Retained earnings, corporate tax, social security ,Contribution and household income.Government we will also send money to your household. In addition, we earn personal income. In the case of income tax when deducted, you get an individual's disposable income.
Is GDP a good measure of welfare?
- Consumer surplus;
- Externalities (positive and negative).
- Non-market exchanges (housework, underground Economy);
- Depreciation of capital (physical, human and environment);
- Inflation, changes in quality.
- Exchange rate, PPP
- Inequality.
- Keep up with Jones.
- Happiness.
Q2 . Explain Net Gross National Product
Ans. Net Gross Domestic Product:
Subtracting renewal, repair, and obsolescence depreciation from GNP gives you gross national product at market prices. Therefore:
GNP at MP – Depreciation = NNP at Market Price
Depreciation is the loss of value that a country's fixed capital (buildings, machinery, equipment, etc.) inventory suffers from wear and tear. The issue of valuing the depreciation of capital stock is one of the most annoying issues in the field of national accounts. The convention was to accept business records as a measure of depreciation without having to re-estimate in terms of current replacement costs. Therefore, a purely domestic product means the market value of all final goods and services after depreciation. The big advantage of the NNP concept is that it reveals a net increase in total production, in addition to current consumption and current alternative investments. This means a long-term improvement in the physical productivity of capital. The concept of NNP has the great advantage of showing a net increase in total products. It emphasizes the long-term importance of maintaining the productivity of the economy. Therefore, it is very useful for researching economic growth.
Q2) What are the main components of national income at factor cost?
Ans. The main components of national income at factor cost are:
- All wages, salaries, and supplementary income earned by employees for the productive services provided, and
- Interest paid to individuals plus
- Net rent for all individuals. Including attribution payments such as rent for private housing
- Income of individual businesses such as farmers, partnerships, professionals such as lawyers, net income of corporations including dividend payments, undistributed income and net income of all types of businesses including corporate tax Minus
- Transfer payments, that is, income payments that do not provide productive services in return. In other words, these are not payments for the production of goods or services, but state or similar public payments from one individual to another, such as interest paid on national debt, social security payments (such as unemployment allowances and old ones). Represents the transfer of income through a target institution (age pension), etc
These remittance payments must be deducted from the total national income determined by adding the total payments made to the factor of production. In addition to the concept of net national income, it is useful to have ideas for certain other income concepts needed for a particular purpose.
Q3) Write down the steps involved in calculating personal income.
Ans. The steps involved in calculating personal income are displayed as follows:
- National income
- Small corporate profit
- Employers' contribution to social insurance is small
- Plus government. Money transfer
- Plus business transfer payment
- Plus net interest paid by the government
- Plus interest paid by consumers
- Plus dividend
- Employees' contribution to social insurance is small
- Equal to personal income
- Disposable income:
Personal income as defined above is not income that a person has the full command to spend, save, or give in any way he or she likes. Income tax and national insurance premiums are mandatory payments and must be deducted in order to obtain what is called personal disposable income.
This income also includes fixed commitments such as contributions such as pensions and installment payments for employment purchases to further reduce individual disposable income.
Therefore, disposable personal income is obtained by deducting personal tax from personal income. These personal taxes are in the form of income tax, wealth tax, expenditure tax and occupational tax. Disposable income consists of personal spending and personal savings.
Disposable income = personal income – personal tax = personal consumption + personal savings.
The concept of disposable income is especially useful in estimating the expected demand for goods and services for personal use by individuals. In times of national emergencies and shortages, this concept helps predict the gap between available supplies and expected demand for goods and services.
Q4) How do we measure national income?
Ans. The output approach focuses on finding the total output of a country by directly finding the total value of all goods and services produced by the country.
Due to the complexity of multiple stages in the production of a good or service, only the ultimate value of the good or service is included in the total production. This avoids a problem called "double counting" where the total value of goods is included several times in a country's production by repeatedly counting at several stages of production. In the meat production example, the value of goods from a farm could be $ 10, then $ 30 from a butcher, and $ 60 from a supermarket. The value that should be included in the final national production should be $ 60, not the sum of all these numbers, $ 100. The added values at each stage of production compared to the previous stage are $ 10, $ 20, and $ 30, respectively. The sum of them provides another way to calculate the value of the final output.
The main formulas are:
- GDP (Gross Domestic Product) at market price = production value in a particular year's economy minus intermediate consumption
- GDP at Factor Cost = GDP at Market Price-Depreciation + NFIA (Net Factor Revenue from Overseas)-Net Indirect Tax (GNP)
- NDP at Factor Cost = Employee Compensation + Net Interest + Rental and Loyalty Income + Income and Unincorporated NDP Profit at Factor Cost
Spending
The spending approach is basically an output accounting method. It focuses on finding the country's total production by finding the total amount spent. This is acceptable to economists, as the sum of all commodities, as well as income, is equal to the total amount spent on the commodities. The basic formula for domestic output is to take all the various fields in which money is spent in the region and combine them to obtain the total output.
{\ displaystyle \ mathrm {GDP} = C + G + I + \ left (\ mathrm {X} -M \ right)} {\ mathrm {GDP}} = C + G + I + \ left ({\ mathrm { X}} -M \ right)
Where:
C = consumption household expenditure / consumption expenditure personal
I = total private sector investment
G = Government consumption and total investment expenditure
X = total export of goods and services
M = Total import of goods and services
Note: (X-M) is often described as XN or NX, both representing "net exports".
The name of the measure consists of either the word "Gross" or "Net", the word "National" or "Domestic", or the word "Product", "Income", or "Expenditure". Will be done. ". All of these terms can be explained individually."Gloss" means the entire product, regardless of its subsequent use. That is, the depletion or obsolescence of a country's fixed capital assets. The "net" indicates the amount of product that is actually available for consumption or new investment.
"Domestic" means that the boundaries are geographical. That is, it counts all goods and services produced within the border, regardless of who they are.
"Nationality" means that boundaries are defined by citizenship (nationality). We count all goods and services produced by the people of the country (or the companies they own), regardless of where their production physically takes place.
The production of French-owned cotton factories in Senegal is counted as part of Senegal's national figures, but as part of France's national figures.
"Product," "Income," and "Expenditure" refer to the three counting methods described earlier: the product, income, and expenditure approach. However, these terms are used loosely.
"Product" is a general term and is often used when one of the three approaches is actually used. The word "product" may be used, followed by additional symbols or phrases to indicate the methodology. So, for example, you get structures such as "Gross Domestic Product", "GDP (Income)", and "GDP (I)".
"Income" here is the income approach was used.
"Expenditure" specifically means that the spending approach was used.
Note that in theory, all three counting methods give the same final number. However, in reality, there are subtle differences from the three methods for several reasons, such as inventory level changes and statistical errors. For example, one problem is that an in-stock item has been produced (and therefore included in the product) but not yet sold (and therefore not yet included in the expenditure). Similar timing issues are due to the value (product) of the product produced and the factors that produced it, especially when the input is purchased with credit and wages are often collected after a period of time. Of production that can cause slight discrepancies between (income).
Q5) Define National Income.
Ans. Fisher ' s definition:
Fisher adopted "consumption" as the standard for national income, while Marshall and Pigot considered it production. "
It's a flaw:
- However, from a practical point of view, this definition is less useful, because there are certain difficulties in measuring goods and services in terms of money. First, it is much more difficult to estimate the monetary value of net consumption than to estimate the monetary value of net production.
- In a country, there are several people who consume specific goods in different places, so it is difficult to estimate their total consumption. Secondly, some consumer goods are durable and can be used for many years.
- If we consider the example of a piano or coat given by Fisher, then only the services they provide within a year will be included in the income. If the coat costs Rs. 100 and lasting ten years, Fisher will consider only rupees. 100 as a year's national income, while Marshall and pigo will include rupees. 100 in the year of national income, when it is made.
- In addition, it is not safe to say that this coat can only be used for ten years. It may last longer or for a shorter period of time. Third, durable goods are often constantly changing, resulting in changes in ownership and value as well.
- Therefore, from a consumption point of view, it is difficult to measure the value of the services of these goods in money. For example, the owner of the Maruti car sells it at a price higher than its actual price, and the purchaser sells it further at the actual price after using it for several years.
- The question now is, Should we consider its price, whether real or black market price, and then when it moves from one person to another, its value should be included in national income according to its average age?
- But the definition proposed by Marshall, Pigot, and Fisher is not entirely flawless. However, Marshallian and Pigovian definitions tell us what affects economic well-being, while Fisher's definition helps us compare economic well-being over different years.
Modern definition:
From a modern point of view, Simon Kuznets defines national income as"the net output of goods and services that flow from the national production system into the hands of the end consumer in a year."”
On the other hand, in a United Nations report, national income is determined on the basis of a system of estimates of national income, as a net national product, as a supplement to the share of different factors, and as a country & apos; s net national expenditure over a period of one year. In fact, while estimating national income, any of these three definitions could be used, because if different items were correctly included in the estimate, the same national income could be derived
Q6) What are the important assumptions of national income?
Ans. Important assumptions are:
• Prices and wages are fixed in the short term
• Changes in resources and total spending during unemployment
• It is reflected in changes in output and income.
• But in the long run, wages and prices are flexible.
• Therefore, the change in total spending
• It leads to price level changes, but not output.
• We will only look at short-term fluctuations, not long-term fluctuations growth.
Income generation
• Consumption depends on income.
• Suppose 40% of each pound of income is spent on Consumer Goods: C = 0.4Y
• Companies spend £ 20 on investment goods: I = 20
• National income is 100.
• This is in equilibrium. Withdrawal = Savings = 20 = Injection = Investment = 20
• Planned total demand = total revenue Unbalance
Solving for equilibrium
• Planned spending = income level of income
• Planned spending = C + I = 0.4Y + I
• Setting this equal to income Y gives:
Y = 0.4Y + I, so
Y = I / (1-0.4) = 5I
• The multiplier is 10 = 1 / 0.1 = 1 / marginal propensity to save.
Adjustment Process
• How much income increases when autonomous Increased spending is determined by the multiplier (Richard Kahn, 1931).
• Companies that produce investment goods as I increase Run out of their stock.
• This will increase production over the next period (Equal demand in the previous period).
• Earn extra income and use it for consumers Being a commodity, retailers' inventory is reduced, which triggers them To order more from the manufacturer
Q7) What do you mean by national income at factor cost?
Ans. Net national income at factor cost:
When a factor of production is produced, the factor of production is paid in form or wage, interest and profit on rent. NNI is the sum of all income payments made to the factor of production. The sum of goods and services for the year is produced by the cooperation of the factors of production, so their monetary value is also distributed to the factors of production.
Therefore, national income can also be regarded as the total or income received by the person who provides the factor of production or the services and resources used for production. These payments take the form of wages, rent, interest and profits.
Q8) What are the major formulas to calculate national income?’
Ans. The main formulas are:
- GDP (Gross Domestic Product) at market price = production value in a particular year's economy minus intermediate consumption
- GDP at Factor Cost = GDP at Market Price-Depreciation + NFIA (Net Factor Revenue from Overseas)-Net Indirect Tax (GNP)
- NDP at Factor Cost = Employee Compensation + Net Interest + Rental and Loyalty Income + Income and Unincorporated NDP Profit at Factor Cost
Q9) Explain the basic problems of National income.
Ans. National Income in India and its problem:
1. Definition drawback,
2. Lack of enough knowledge,
3. Non-availability of reliable info,
4. Technique choice,
5. Lack of differentiation in economic operate,
6. Double count.
What a fastidiously calculable national have the benefit of each country. A number of these difficulties square measure listed below:
(1) Definition problems:
What ought to be enclosed in national income? Ideally, you must embody all the products and services made within the course of the year, however there also are services that don't seem to be calculated in terms of cash, for instance, the services of housewives.
(2) Lack of enough data:
The lack of adequate applied math knowledge makes the task of estimating value a lot of serious and troublesome.
(3) Inability to get reliable information:
The reason for illiteracy is that the majority producers don't have a plan of the number and price of their output and don't follow to apply of maintaining a standard account.
(4) Technique choice:
Whereas scheming value technique selection is additionally a vital issue. The incorrect method has unhealthy consequences.
(5) Lack of differentiation in economic function:
In all countries, skilled specialization continues to be incomplete, there's an absence of differentiation in economic functions. People will receive financial gain partially from agricultural possession and partially from manual add the trade throughout the loose season.
(6) Double count:
Double enumeration is additionally a vital issue once scheming value. If the worth of all product and services is summed up, some product square measure currently used and consumed within the manufacture of different things, therefore the best thanks to avoid this error once the add overtakes the output of the country is to calculate solely the worth of products and services that enter the ultimate consumption.
