Question

“In a two-sector economy, National income is always more than Domestic income.”

Defend or refute the given statement with reasons.

Answer 1

National Income (NI) is the sum of all income earned in the country and abroad, whereas Domestic Income (DI) is only the income made in the country. The National Income is the same as the Domestic Income if there is no foreign income. If money arrives from abroad, the National Income exceeds the Domestic Income. Which means the claim “In a two-sector economy, National income is always more than Domestic income” is refuted.