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2. Domestic and National Concepts of Income, , At the macro level, the concept of income is used both as 8 domestic, concept and a national concept. When used as a domestic concept, we, call it domestic income, and when used as a national concept, we call it, national income. Both domestic income and national income inclu, the four basic elements of factor income, viz,, (i) compensation of, imployees, (i) rent, (i) interest, and (iv) profit)But there is a difference,, , It is as this; Domestic income is the sum total of factor incomes, (compensation of employees + rent + interest + profit) generated within, the domestic territory of a country (no matter who generate it: normal, residents or non-residents). National income is the sum total of factor, incomes (compensation of employees + rent + interest + profit), generated by normal residents of a country (no matter where it is, generated: within the domestic territory or outside it)., , , , , , , , Here, it becomes important to understand the concept of domestic, territory of a country., , Domestic Territory of a Country, , In common language the domestic territory of a nation is understood to, , be the territory lying within the political frontiers (or boundaries) of a, , country. But in national income accounting, the term domestic territory, , is used in a wider sense. It includes the following:, , (1) Territory ling within the political frontiers including territorial, waters of a country., , (2) Ships and aircrafts operated by residents of the country across, different parts of the world. For example, Indian ships moving, between Japan and Korea regularly or passenger planes operated, by Air India between England and Canada are a part of the, domestic territory of india., , (3) Fishing vessels, oil and natural gas rigs and floating platforms, operated by the residents of the country in the international, waters or engaged in extraction in areas in which the country has, the exclusive right of exploitation. For example, the fishing boats, , operated by Indian fishermen in the international waters of the, Indian ocean are part of the domestic territory of India., (4) Embassies, consulates and military establishments of the country, located abroad. For example, the Indian embassy in the United, States of America is a part of the domestic territory of India and the, embassy of USA in India is a part of the domestic territory of United, States of America., [Note: It may be noted in this context that domestic territory does not refer to the areas, , of ownership beyond political frontiers of a nation. It only refers to areas of, operation generating domestic income], , , , factor income, isa part of nat, domesticinco, income gener, country, and, rest of the wo, , Domestic ine, , Domestic Int, , = Nation, [Note : Net fac, , Domestic Ir, , There is no., ‘domestic |, while the t, identical w, carefully to, two sector, , sector.