Question

In the area of “income” there is a wide variety of adjectives that precede the word, domestic, national, gross, net, nominal, and real to identify the important ones. Thoroughly differentiate what exactly is being included or excluded when that adjective is used.

Answer 1

1. Domestic income is the income earned by normal residents of a country within its geographical boundary
2. National income is the income earned by its citizens whether in the country or abroad
3. Gross income is which includes depreciation
4. Net income is which excludes depreciation
5. Nominal income is income which is not adjusted by the changes in the purchasing power i.e. inflation
6. Real income is which is well adjusted for inflation

National income = Gross Natinal income which includes domestic income - income earned by foreigners in our country + income earned by country's citizens abroad