National Income is the total monetary value of all final goods and services produced in a country during a financial year. It's a key indicator of economic performance. There are three main methods to measure it: the Output or Production Method (summing up the net value added by all producing units), the Income Method (summing up all factor incomes like rent, wages, interest, and profit), and the Expenditure Method (summing up all final expenditure on consumption, investment, government spending, and net exports). Key concepts include Gross Domestic Product (GDP), Gross National Product (GNP), Net National Product (NNP), and Per Capita Income. Difficulties in measurement arise from issues like the black economy, non-monetized transactions, and obtaining reliable data.
- National Income is the total value of all final goods and services produced in a year.
- GDP (Gross Domestic Product) is the value of goods and services produced within a country's borders.
- GNP (Gross National Product) = GDP + Net Factor Income from Abroad (NFIA).
- Depreciation is the wear and tear of capital goods.
- NNP (Net National Product) = GNP - Depreciation. NNP at factor cost is the true National Income.
- Output Method sums up 'value added' at each stage of production.
- Income Method sums up all factor incomes (rent, wages, interest, profit).
- Expenditure Method sums up all final spending (C + I + G + (X-M)).