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Unformatted text preview: example we have, The economy can be said to have grown by 20 percent over the two periods Y 0 and Y 1 . Comparison of national income and computation of real growth rate, though important, is not a satisfactory indicator. It is only an absolute measure and gives an idea about gross improvements in the countrys wealth. However, it does not explain ultimate improvement in the living standards of the population of the country. This is because while computing the growth rate we have not related it to the size of the population. If over the same period, the size of the population has also increased from say N to N 1 , then the share of each citizen in the national income must have increased only by a smaller proportion. Such a share of every citizen in the national income is called per capita income ( PC ) which is obtained as ratio of real national income to the population....
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This note was uploaded on 11/17/2011 for the course EC ec 201 taught by Professor - during the Fall '10 term at Montgomery.
- Fall '10
- National Income