NATIONAL INCOME
National income is the sum of money value of net flow of all the goods and services produced by normal residents of a country during a period of account.
According to Central Statistical Organization (CSO)
‘National income is the sum of factor incomes earned by normal residents of a country in the form of wages, interest and profit in an accounting year.’
National product is the net output of commodities and services flowing during the year from the country’s productive system into the hands of ultimate consumers or into the net addition to the country’s capital goods.
Methods of Measuring National Income
In every economy the circular flow of production, income and expenditure remains in operation continuously due to the economic activities. Production generates income which leads to the creation of demand for goods and services and hence expenditure. National income can be measured at every stage of circular flow of production, income and expenditure. At production stage net value of final goods and services produced in the country in a year is calculated. It also includes net factor income earned from abroad. At income level net annual factor income is added along with net factor income from abroad. At expenditure level, national income is measured by adding the net value of final expenditure and the net factor income from abroad. Thus there are three methods of measurement of national income:
1. Product Method or Value Added Method
2. Income Method
3. Expenditure Method
National Income
Product Method or Value Added Method
This is also known as the ‘Inventory Method’ or ‘Commodity Service Method’. This method approaches national income from the output side. According to this method the economy is...
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...ountry depends upon the nature and condition of the economy as well as the purpose of undertaking this exercise? The best way to arrive at national income will be to employ all these three methods so as to permit their cross- checking ensuring greater accuracy and throwing more light on details.
Difficulties in Calculation of National Income
Although all methods are used almost in all countries to calculate national income, yet the calculation is a complex affair and is best with conceptual and statistical difficulties. Kuznets mentions the following difficulties:
• Difficulty of defining the nation
• Non-marketed services
• Inapplicability of any one method
• Which stage to choose
• Paucity of statistics
• How to avoid double counting
• Identification of transfer payments
• Self-consumed production
• Multiple occupations
• Incorrect statistics
The analytical procedures is yet another way to detect the fraud. Through analytical procedures the relationship between different figures is develop that support the increase or decrease effect on the balance sheet and the income statement. The following procedures to be performed:
19.6% and 13.9% of people earn money in construction and trade, respectively. Public organizations often work with native citizens rather than immigrants. In the other spheres such as skilled work, transport of goods, rubbish collection, the proportion is just below 10%.
The state of the economy is important both on a micro and macroeconomic level. On a macro level, those in government pay close attention to these statistics in order to guide fiscal and monetary policy. On a micro level, households can use this data to guide their consumption and investments, while businesses can use this information in their strategic planning. In looking at economic information, there is current data, historical data, and economic forecasts. This enables decision makers to get a more complete picture of economic trends and see the relationship between various economic indicators.
Gross domestic product (GDP) is one of the best ways to measure how a country’s economy is doing. A main component in figuring the GDP is personal consumption expenditures. Personal consumption expenditures accounts for about two-thirds of domestic
Income is defined in the Merriam-Webster’s Dictionary as a monetary gain from “labor, business, or property”. For example, a person’s weekly income is derived from their hourly wage multiplied by the number of hours they work weekly. To further distinguish wealth from income, it is important to view them from the perspective of inequality. Wealth inequality is “the unequal distribution of assets (including money, business income, homes, automobiles, and investments) between the wealthy and the rest of society” explained Andrew Walter in his document “Wealth Gap: Overview” (2). Whereas income inequality is, “The difference in income between societies or between groups within a society” (Walter 2).
adults. The combined income of the household amounts to an average net pay of $84,431 a year
Natural capital: most of the people associate natural capital with natural resources. Products and processes required by the organizations in order to deliver their services and manufacturing of products.
Gross Domestic Product (GDP) is the market value of all final goods and services produced by factors of production within a country in a given period of time. It can be calculated using either the income, output, or expenditure method as illustrated on the circular flow of income diagram below.
This chart shows the net revenues and net earnings for the years of 2013-2009. As you observe the net revenues have been consistent in the 18,000 for at least 3 years in a row. This is a good trend for the Kraft Food Group. The trend for the net earnings is sporadic. The net earnings is also called the bottom line. This shows the amount of money that is left over after paying all of the expenses. Kraft Food Group needs to cut down on its expenses.
The Net Present Value (NPV) is a Discounted Cash Flow (DCF) technique that relies on the concept of opportunity cost to place a value on cash inflows arising from capital investment, where opportunity cost is the "calculation of what is sacrificed or foregone as a result of a particular decision".
GDP measures the total value of all goods and services produced within that territory during a specified period. GDP is used to measure a country’s wealth. Basic’s of life, food, etc. shelter and clothing is not likely available to most people in poorer countries. The.
Value Added Tax (VAT) 4. Monetary Cash Flow Through this assignment I have given a chance to run the British Economy for five years. In order to understand this assignment we first have to understand what these above four variables are? Explanation Government Expenditure = ==
National income is a measure of the value of the output of the good and
Seen another way, this apparatus measures the "genuine"— that is, balanced for inflation—estimation of income after some time. Note that the segments of the CPI don't change in cost at the same rates or even fundamentally move the same course. For instance, the costs of auxiliary training and lodging have been expanding a great deal more quickly than the costs of different merchandise and benefits; in the interim fuel costs have risen, fallen, risen again and fallen once more—every time strongly—in the previous
The Gross Domestic Product (GDP) is the total market value of in a country’s output. The GDP is the total market value of all final goods and services produced by factors in within given period of time that located in the country doesn’t matter they are citizens or foreign-owned companies. Hence, the GDP is the best way to measure the country economy.