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    National Income: By: Aarti Ankit Nisha

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    The document discusses national income, including its definition as the sum of factor incomes earned by residents in a country. It outlines the circular flow of income and key national income concepts such as GDP, GNP, NNP, personal income, and disposable income. The document also discusses factors affecting national income, uses of national income statistics, limitations of the statistics, and the three main methods of calculating national income - the output, income, and expenditure methods.

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    National Income: By: Aarti Ankit Nisha

    Uploaded by

    Nichu@
    68 views18 pages
    The document discusses national income, including its definition as the sum of factor incomes earned by residents in a country. It outlines the circular flow of income and key national income concepts such as GDP, GNP, NNP, personal income, and disposable income. The document also discusses factors affecting national income, uses of national income statistics, limitations of the statistics, and the three main methods of calculating national income - the output, income, and expenditure methods.

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    National Income

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    The document discusses national income, including its definition as the sum of factor incomes earned by residents in a country. It outlines the circular flow of income and key national income concepts such as GDP, GNP, NNP, personal income, and disposable income. The document also discusses factors affecting national income, uses of national income statistics, limitations of the statistics, and the three main methods of calculating national income - the output, income, and expenditure methods.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    68 views18 pages

    National Income: By: Aarti Ankit Nisha

    Uploaded by

    Nichu@
    The document discusses national income, including its definition as the sum of factor incomes earned by residents in a country. It outlines the circular flow of income and key national income concepts such as GDP, GNP, NNP, personal income, and disposable income. The document also discusses factors affecting national income, uses of national income statistics, limitations of the statistics, and the three main methods of calculating national income - the output, income, and expenditure methods.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 18

    National Income

    By: Aarti Ankit Nisha

    Contents
    Introduction Circular flow of Income NI Concepts Factors affecting NI

    Uses of NI Statistics Methods of calculating NI Limitations of NI Statistics

    National Income: Introduction


    Central Statistical Organization defines National income as:

    the sum of factor income earned by the normal residents of a country in the form of wages, rent, interest and profit in an accounting year.

    National product is usually used synonymous with National income.

    Circular Flow of Income

    National Income Concepts


    GDP GNP NNP Personal income Disposable income

    Personal Income
    Personal income is the sum of all incomes actually received by all individuals or households during a given year. Personal Income = National Income Social Security Contributions Corporate Income Taxes Undistributed Corporate Profits + Transfer Payments.

    Disposable Income
    From personal income if we deduct personal taxes like income taxes, personal property taxes etc. what remains is called disposable income. Disposable Income = Personal income personal taxes.

    Factors affecting NI

    Technology

    Government

    Factors of Production

    Political Stability

    NI

    Uses of NI Statistics
    Standard of Living

    Business Decision

    Uses
    International Comparison

    Policy Formulation

    Limitations of NI Statistics
    Price Changes Omission/Under estimation

    Problem of Comparison

    Population Size

    National defense

    Time

    Methods of calculation of NI
    Output method
    Income Method

    Expenditure Method

    Output Method
    Also called the value-added method Approaches national income from the output side The economy is divided into different sectors such as: agriculture, fishing, mining, construction, manufacturing, trade and commerce, transport, communication and other services. Gross product is found out by adding up the net values of all the production that has taken place in these sectors during a given year.

    Precautions
    Double counting Value addition in particular year Stock appreciation Production for self consumption

    Income Method
    Approaches national income from the distribution side.

    NI is obtained by summing up of the incomes of all individuals in the country NI is calculated by adding up the rent of land, wages and salaries of employees, interest on capital, profits of entrepreneurs and income of self-employed people.

    Precautions
    Transfer payments should not be included Illegal money earned should not be included Windfalls should not be included Receipts from the sale of financial assets should not be included

    Expenditure Method
    This method arrives at national income by adding up all the expenditure made on goods and services during a year. The national income is found by adding up the following types of expenditure by households, private business enterprises and the government: GDP = C + I + G + (X M)

    Precautions
    Expenditure on second hand goods Expenditure on purchase of old shares and bonds Expenditure on transfer payments by governments

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