• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

What is a countries national income? What can it be used for? How is it measured?

Extracts from this document...

Introduction

a) What is a countries national income? What can it be used for? How is it measured? National income is a shorthand for everything that is produced, earned or spent in a country. Macro Economics is concerned with the economy as a whole. A key macroeconomic variable is the level of total output in an economy. National Income is the value of income paid by firms to households in return for land, labor, and capital. National income can be shown in a diagram of the circular flow of income in a simple economy. Households spend their money on goods and services supplied by firms. Households supply factors of production to firms in return for rent, wages, interest and profit. National Income is a measure of the output, expenditure and income of an economy. National income statistics provide not only figures for these totals but also a breakdown of the totals. ...read more.

Middle

The key measure of national income is GDP. GDP mean the gross domestic product, the total output at any market price, it also divided into five factors-consumption (C), investment (I), government spending (G), export (X), and import (M). It calculated by C+I+G+X-M. Countries use GDP to calculate the national income and then measured the economic growth. GDP is the fastest way to calculate, it estimated easily than other methods. However, GDP and national income only measured the actual growth not potential growth, although GDP was the best way of measured national income. There are also other factors such as Gross value added (GVA), Gross national income (GNP) and Net national income at market prices. Therefore, there are some factors leads to the inaccuracy national income, which use it to measure the economic growth. b) Between 1948 to 1998, the UK's GDP rose by nearly 7,000%. ...read more.

Conclusion

Moreover, the change in real income (values adjusted for inflation) over time will also be affected by the inflation rate. The inevitable errors made in the calculation of the inflation rate compound over time. * Changes in population:- National income statistics are often used to compare living standards over time. If they are to be used in this way, it is essential to compare national per capita (i.e per person). * Quality of goods and services:- The quality of goods may improve over time due to advance in technology but they may also fall in price. For instance, cars today are far cheaper. National income would show this fall in price by a fall in national income, wrongly implying that living standards had fallen. On the other hand, pay in the public sector tends to increase at about 2% per annum faster than the increase in inflation. This is because pay across the economy ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Measurement of National Income, Strengths and Weaknesses of National Income Statistics.

    These flows are known as injections. These may take the form of: * Other firms, ie investment expenditure. * The government, ie government expenditure. * Foreigners, ie export expenditure. The diagram shows the impact of these injections on the circular flow: [Source]3 When there is an increase in the level of injections a part of it will be received by a household as extra income.

  2. The National Debt

    The interest being paid on the debt has fallen to 28% from its peak at 34% in 1990 (Defects and the Debt 25). The debt itself has decreased to just under 50% from its peak of 50.2% in 1992 (Federal Debt 102-103).

  1. Describe various methods that could be used to prepare a preliminary budget for a ...

    The huge range in superficial area rates presents the estimator with some problems. At best, therefore, they can only represent a guide price and must be adjusted to suit local conditions on the basis of the estimator's personal experience and skill.

  2. How is GDP measured and what are its limitations as a measure of the ...

    The value of stocks can fluctuate with market forces and an appropriate adjustment should be made. * Public and merit goods -these are provided through the non-market sector and examples include the police service and health care. These types of goods do not have a market price because they are

  1. How is GDP measured and what are its limitations as a measure of the ...

    production are equal to the price at which these products are sold. The third method of measuring GDP is the Output Approach. This method computes GDP by counting all the goods and services that have been produced and provided. However, it has to be assumed that all output has to be sold in order to calculate.

  2. Retailing In India - A Government Policy Perspective

    This is already beginning to happen. For instance, a supermarket chain purchases wheat along with an atta company to lower costs, and has succeeded in entering marketing/ promotional deals with several branded goods players. 7. Limited adoption of best practices by upstream players: Food processors in India are typically small and unorganized.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work