| What are the factors determining National Income of a country? |
| 1. Quality and quantity of factors of production |
| 2. The extent of technical know-how and technology in production |
| 3. Political stability. |
A) 1 and 2
B) 1 and 3
C) 1, 2 and 3
D) 2 and 3
Correct Answer: D
Solution :
[d] Factors determining national income can be discussed as fallows - Quality and quantity of factors of production: the quality and quantity of land, the climate, the rainfall, etc., determine the quantity and quality of agricultural production. This determines the size of national income. The quantity of labour has double influence since labour is both a factor of production as well as the consumer of what is produced. The quality of labour depends upon intelligence, training, which in turn decides the volume of industrial productivity. This will have decisive influence on output. Likewise, the quantity and quality of entrepreneurial ability is also a main element in the determination of national income. State of technical know-how: the extent of technical know- how and technology in production determine the capital formation in the country. A country with abundant resources will be dormant without any determination if the resources are not scientifically exploited. Natural resources combined with advanced technology will go a long way in increasing the size of national income. Political stability: the key to increase the national income rests with important factors like capital formation, natural resources, technical know-how and political stability.
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