National Income Determination | Macro Economics - B Com PDF Download

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National Income
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National Income
What is National Income?
• National income measures the total value 
of goods and services produced within the 
economy over a period of time.
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National Income
What is National Income?
• National income measures the total value 
of goods and services produced within the 
economy over a period of time.
Why is national income important?
• Measuring the level and rate of growth of national 
income is important to economists when they are 
considering:
– Economic growth and where a country is in the business 
cycle
– Changes to average living standards of the population
– Looking at the distribution of national income  (i.e. 
measuring income and wealth inequalities)
Page 4


National Income
What is National Income?
• National income measures the total value 
of goods and services produced within the 
economy over a period of time.
Why is national income important?
• Measuring the level and rate of growth of national 
income is important to economists when they are 
considering:
– Economic growth and where a country is in the business 
cycle
– Changes to average living standards of the population
– Looking at the distribution of national income  (i.e. 
measuring income and wealth inequalities)
NATIONAL INCOME CONCEPTS
• Gross domestic product (GDP) is defined as 
"an aggregate measure of production equal to 
the sum of the gross values added of all 
resident institutional units engaged in 
production 
• Gross national product (GNP) is the market 
value of all the productsand services 
produced in one year by labor and property 
supplied by the citizens of a country.
Page 5


National Income
What is National Income?
• National income measures the total value 
of goods and services produced within the 
economy over a period of time.
Why is national income important?
• Measuring the level and rate of growth of national 
income is important to economists when they are 
considering:
– Economic growth and where a country is in the business 
cycle
– Changes to average living standards of the population
– Looking at the distribution of national income  (i.e. 
measuring income and wealth inequalities)
NATIONAL INCOME CONCEPTS
• Gross domestic product (GDP) is defined as 
"an aggregate measure of production equal to 
the sum of the gross values added of all 
resident institutional units engaged in 
production 
• Gross national product (GNP) is the market 
value of all the productsand services 
produced in one year by labor and property 
supplied by the citizens of a country.
• Personal Income (PI)
Personal Income i s the total money income 
received by individuals and households of a 
country from all possible sources before direct 
taxes.
• Per Capita Income (PCI)
Per Capita Income of a country is derived by dividing 
the  national income of the country by the total 
population of a country.