what is national income according ti marshel Related: Nominal and Rea...
Marshall defines national income or national dividend in the following way: “The labour and capital of a country, acting on its natural resources, produce annually a certain net aggregate of commodities, material and immaterial including services of all kinds… This is the true net annual income or revenue of the country or national dividend.”
The term net refers to deductions from total gross produce in respect of depreciation and wearing out of the plant and equipments plus additions of net income from abroad. This may be construed as national dividend as a flow of goods and services but not a fund. In Marshall’s words, “the national dividend is at once the aggregate net product of and the sole source of payment for all agents of production within the country.” Thus, what is produced in an economy is distributed among the various factors of production.
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what is national income according ti marshel Related: Nominal and Rea...
National Income according to Marshall:
National income is a concept used in macroeconomics to measure the total value of goods and services produced in a country over a specific period, usually a year. According to Alfred Marshall, a renowned economist, national income is the aggregate of all incomes earned by individuals and businesses in a country during a given period.
Nominal and Real GDP:
- Nominal GDP: Nominal GDP is the total value of goods and services produced in a country at current market prices. It does not account for inflation or changes in price levels, making it a simple measure of economic output without adjusting for changes in purchasing power.
- Real GDP: Real GDP, on the other hand, adjusts the nominal GDP for changes in price levels by using a base year as a reference point. It provides a more accurate measure of economic output by accounting for inflation and allowing for comparisons over time.
Macroeconomics:
Macroeconomics is a branch of economics that focuses on the behavior and performance of an economy as a whole. It deals with factors such as national income, unemployment, inflation, and economic growth. Macroeconomists analyze the interactions between different sectors of the economy to understand how policies and external factors impact the overall economic health of a country.
In conclusion, understanding national income according to Marshall, the differences between nominal and real GDP, and the significance of macroeconomics in analyzing and managing the economy are essential aspects of studying the broader picture of a country's economic performance.