Question

State two reasons that make national income as a good indicator of economic welfare.

Answer 1

National income is generally considered a reliable measure of economic development or welfare. This is due to several reasons, two of which are important. 

1. A higher national income indicates a larger value of goods and services produced in the country (since national income equals national product), and economic development essentially means greater production of goods and services. 
2. A rise in national income is usually linked with an improvement in the overall standard of living, because countries with higher income levels can spend more on social sectors such as education, healthcare, and other welfare projects.