Economy where production is carried on only to the extent of sufficiency for self consumption – marketable surplus is not at all considered Ignores new products In case of National income at constant prices the base year not having a product like cell phone leads to rejection of product in calculations. Ignores quality of goods • Quality of goods have to considered because they have cause and effect relationship with quantity • Cheaper less quality goods do not last long; thus people are forced to make frequent repeat purchases; whereas quality goods last long thus minimizing the repeat purchase quantity Ignores quality improvements • Earlier computers were energy hungry, costly and slow. Here the higher cost show higher national income. Comparatively higher computing power is available at low cost today which shows a relative decrease in national income National income is not a reliable indicator of welfare • The National Income aggregate of an economy doesn't help us in any way because, if the distribution of wealth is unequal then we have the extremes of lot of rich and lot of poor people. It only takes how much not what is produced • More medicines consumed reflects more national income but it is not a sign of welfare Consistency or sustainability in growth of national income ignored • No weightage is given for the above

Doesn't tell us whether it is capital consumption or real wealth expansion • Government spending on building pyramidsDeterminants, • Major issues of developments, • India as a developing economy, • Price stability – inflation, • Price indices, • Business cycle – features, • Phases, • Indicators – lead, lag, coincidental. Determinants- Major issues- India as a developing economy- Contribution of different sectors- price stability-Business cycle Economic Growth • Increase in the amount of the goods and services produced by a country over time Various indicators can be used: real per capita GDP, real per capita GNP, … • Economic growth notes • In an economy there must be balanced economic growth of all sectors – agriculture, manufacturing industry and the service sector. Only then, economic growth will benefit all sectors of the population. Not only that, economic welfare depends not only on the growth of output but on the way it is distributed among different factors of production in the form of rent, wages, interest and profits.

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