1. What is National Income?

It is the measurement of the output of services and goods made by our

country over a length of time or a financial year. This is the result of
economic activities in the economy in a year in terms of money. It is
interconnected with national output, national expenditure and national
dividend. Generally, this is the output of a certain country in terms of
monetary value.

2. How do we measure national income?

Income approach – For this type of measurement, we add all revenues

from ownership of assets and from employment before taxation
received from all the production of the economy. It is also called the
“factor income method” We also need to add the trading surplus of the
public sector corporations and the undistributed profits of the private
sector.

Output approach – in this method we add the values of services

rendered or goods produced during a year in order to calculate the
National Income. Gross National Product (GNP) at factor cost is
recorded in this method. This method is unscientific because it adds
only the goods that are sold in the market and doesn’t include the ones
that aren’t sold in the exposed market.

Expenditure approach – This method totals the expenditure of a whole

economy. There are two types of expenditure: Consumption
expenditure and investment expenditure. In consumption expenditure,
the consumption of the households from goods and services and also
the consumption of the businesses are recorded. In the investment
 expenditure, the investments like plant and machinery, buildings and
land are recorded.

3. Is it important that we know the country’s national income? Why and

why not?

It is important for the consumers since knowing the country’s national

income affects the decision of the government in making policies on
the economy because we are a democratic country meaning what’s
good for the public must prevail.

Knowing the national income is also helpful for the businesses since
they could actually know or estimate the tastes and preferences of the
consumers so that they could align their products on the product line
that garners most of the national income.

It is also important for the government to know the national income

since they could know the macroeconomic problems such as inflation
and make economic guidelines and policies to solve these
macroeconomic problems.

4. What do you think is the impact on our lives knowing our national
income?

As a student and a voter as well, knowing the national income induces

many impacts on our lives. An example is voting the right official that
should impact the economy’s national income positively. It could be
determined by the experiences and educational attainment of the
potential politicians.
Another impact is that as a whole, we could influence the government
decisions in imposing taxes and such policies depending on the
national income. If our national income is low, the government might
lower the taxes to increase spending which leads to greater national
income. On the other side, if our national income is high then it would
be prosperous for the country since it is the main goal - to export
quality products.