>What is National Income?

National income measures the monetary value of the flow of output of goods
and services produced in an economy over a period of time.

>Definitions of National income
1. The income generated by a country's production, and therefore the total income of its
factors of production. Except for some adjustments that don't usually enter theoretical
models, NI is the same as GDP.

2. A measure of the money value of goods and services available to a nation from
economic activity.

3. It is the sum total of incomes received by all people of a country over a period of time.
It is calculated asgross national product minus depreciation minus sales taxes and other
small items.

4. The total income earned by the residents of a country in one year (also called
National Output or National Expenditure).

5. A measure of the total level of economic activity which takes place in an economy
over a year.

6. The total value of all income in a nation (wages and profits and interest and rents and
pension payments) during a given period (usually 1 yr)

GDP computed with these methods are summarised as:

1) Expenditure Method: Consumption + Investment + Government Purchases +
(Exports Imports)

Y = C + I + G + (X-M)

2) Income Method: Wages + Profits + Interest + Rent

3) Product/Value Added Method: Sum of Gross Value added by all firms
There are three ways of calculating GDP - all of which
should sum to the same amount:
National Output = National Expenditure (Aggregate Demand) = National Income
(i) The Expenditure Method - aggregate demand (AD)
The full equation for GDP using this approach is GDP = C + I + G + (X-M) where
C: Household spending
I: Capital Investment spending
G: Government spending
X: Exports of Goods and Services
M: Imports of Goods and Services
The Income Method adding together factor incomes
GDP is the sum of the incomes earned through the production of goods and services. This
is:
Income from people in jobs and in self-employment
+
Profits of private sector businesses
+
Rent income from the ownership of land
=
Gross Domestic product (by factor incomes)

GDP & GNP
GDP is the money value of all goods and service produced in a domestic
territory of a contry.
GNP is the money value of national production for any specific period of time.


GNP= C + IG + G * (X-M) + NFIA
C = PRIVATE FINAL CONSUMPTION
IG = GROSS INVESTMENT
G =GOVERNMENT EXPENDITURE
(X-M) = NET EXPORT NET IMPORT
NFIA = NET FACTOR INCOME FROM ABROAD

NET NATIONAL PRODUCT (NNP)
NNP (NATIONAL INCOME) = DFI +NFIA or
NNP = GNP - Depreciation
DFI= Domestic factor Income
NFIA = NET FACTOR INCOME FROM ABROAD

NATIONAL INCOME AT FACTOR COST
NI (FACTORY COST) = NNP indirect tax + subsidies

PERSONAL INCOME = national income corporate taxes undistributed
corporate savings social security contribution + transfer payments