Question

Using examples, discuss why measuring a nations income is important to planning economic development.

Answer 1

Measuring the nation’s income is important for planning economic development because the nation’s income will help in identifying the total money earned by the households of the nation. It helps in understanding the productivity of the nation and its people. Planning economic development is possible when national income is measured and total productivity. National income is important in developing economic policies because without it, no decision will be made correctly, and they will not be efficient.

Hence, measuring national income is very important in planning economic development. For example,

• National income measures the size of the economy and the country’s performance at various levels.
• It helps in tracking the speed of economic growth.
• It helps in predicting the future of economic growth.
• It also helps in correcting the developmental targets for various sectors of the economy based on past performances.

Therefore, all these information are analyzed with the help of national income, and on the basis of this information, economic development is planned.

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