INTRODUCTION“National income is the money value of all goods and service produced in a country during a year” _J. M.KEYNES
CONCEPTS Gross National Product: Defined as the value of all final goods and services produced during a specific period, usually one year including incomes earned abroad by nationals and excluding incomes earned locally by the foreigners. Gross Domestic Product: Defined as the market value of all final goods and services produced in the domestic economy during a period of one year including income earned locally by the foreigners excluding incomes earned abroad by the nationals.
METHODS OF MEASURING NATIONAL INCOME Production production method Income Method ExpenditureExpenditure Income method
PRODUCTION METHOD Classification into sectorsEstimation of goods and services of each sectorValuation of products in terms of money
INCOME METHOD rentIncome from wageabroad GNI profit interest
EXPENDITURE METHOD GrossIndividual Gov expenses expenses national income
IMPORTANCE OF NATIONAL INCOME To estimate economic development. To know how far development objectives were achieved. To know the contribution of various sectors to national income.
CONSTRAINTS TO NATIONAL INCOME Non availability of reliable statistics. The service of housewives is not included in the national income because this service is not sold in the market. Individuals do not keep correct account of their consumption. Illiteracy and ignorance Lack of proper criteria for measuring the value of services.