National Income (basics)

MACRO ECONOMICS (National Income) Basic Information

By Richard Thomas

Here I give short description on National Income, inside this we cover following: • •

Concept of National Income Importance Of National Income

NATIONAL INCOME: The total sum of goods and services produced by the people of a country with the help of capitals and national resources called National Income (Prof. Alfred Marshall) We can define National Income as the collective achievement of a nation. In this way, the National Income is the aggregate of the individual incomes. (Prof. Gardner Ackley) National Income is the basic concept of economic, which refers to the market value of the goods and services produced during a particular year. (Prof. Richard Lipsy)

CONCEPT OF NATIONAL INCOME: The National Income is the combination of various type of income therefore; to understand the National Income the following concepts require their full comprehension. •

GROSS NATIONAL INCOME: Gross National Income product is the total sum of goods produced in the country during a certain year or their market value. This concept includes agriculture and Industrial goods as well as services like wheat, rice cotton, cement, and sugar, services rendered by doctors, teachers, advocates, and Labor etc.

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NET NATIONAL PRODUCT: If the Depreciation charges (money) are deduct from Gross National Product (income), the residual (product) called Net National Income

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PERSONAL INCOME: The Income earned by anybody in his personal capacity is turned as “PERSONAL INCOME”. The personal income includes income earned through charity pension etc. called “Transfer Earning”. Moreover, personal income includes also wages, premium of insurance, interest profits, unemployment allowances etc. i)

DISPOSABLE INCOME: Having paid general dues out of the total income, residual can be disposed off freely by the earner. Due to this reason, it has called “Disposable Income”

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ii) NON-DISPOSABLE INCOME: The part of the earned income like compulsory taxes called “Non-disposable Income” •

IMPORTANCE OF NATIONAL INCOME: The study of the National Income can cultivate the following importance: 1. The sources of the income can be known by the study of National Income, which one of them is most important. For Example, the dominant part of the National Income in Dubai is Tourism. 2. Economics positions and potential of a country can be assisting by the study of National Income. If the National Income of a country is high, it will also mean that the living standard of the people of that country will also be high. On the contrary, the low income of the people reflects the low living standard of the people. 3. The pace of economics development can be know by comparing the income of one financial year with the one of the past year income in the light of which economic and financial policies can be drawn to be adopting in future. 4. Various economics problems like unemployment economics instability, dearness etc, can also be resolved through the study of National Income. 5. Study of National Income is indispensable for drawing and changing economics plans and policies. 6. The question can only be resolved by the study of National Income that why a country is victim of inflation or deflation. 7. The study of National Income also reveals that which of the sector of the economy is stable and strong and which one is in the stable & weak? What steps are required to be adopted to make the weak sector strong? 8. Proportion maintained between the income and investment can be known through the study of National Income and if this proportion is not suitable for employment, it can be rectified.

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