Per capita income of a country is derived by:

The correct answer is National income and population both

Key Points

• Per capita income is the average income earned per person in a country.
• It is calculated by dividing national income by the total population of a country.

                             \(\text{Per Capita Income} = {National Income \over \text{Population of a country}}\)

Important Points

• Per capita income is an important measure of the real economic growth of a country.
• It is an indicator of the social welfare of an economy.
• It includes all individuals of the country not just adults but children and infants also.
• Hence it is unable to account for inflation, poverty, inequality, savings, and wealth.​

Additional InformationNational income is the sum of the factor income earned by the normal residents of a country within a financial year.

• It is equal to the value of produced goods and services by the normal residents of a country within a financial year.
• National income is calculated by the value-added method, income method and expenditure method. 
  • In the value-added method, the gross value added is calculated throughout the primary, secondary and tertiary sectors of the economy
  • In the income method, the factor income is calculated throughout the economy 
  • In expenditure method, the sum of expenditure by all sectors of the economy is calculated.