Real National Income?

Question

I understand that national income in calculated by GNP, but i was wondering if this is real national income, or if some other calculation needs to be done to this figure after the rate of inflation for the specific year is calculated.

thanks

Answer 1

There are two types of National Incomes.

1. Real National Income

2. Monetary/Nominal National Income

1. Real National Income:  When we calculate the Physical amount of goods and services i.e 10 tables & 20 chairs, this is called real national income.

2. Monetary National Income: When we calculate the amount of goods and services in monetary unit i.e $ 100, this is called monetary national income.

In Short   10 Tables are real income and if 1 table price is $10 then $ 100 is monetary income.

I hope this will solve your problem.