Summary National income statistics

 National income is a country’s total output.

 National income statistics is a general term for a number of measures of a
country's economic activity in terms of its output income and expenditure.
 These statistics can be used for assessing the performance of the economy,
forecasting change, planning for the future, to make comparisons over time, for
testing hypothesis and building economic models, and useful to foreign investors
and international organizations such as UN and the World Bank.
 GDP is a measure of the total value of output produced by the factors of
production based in a country over a period of time (a year).
 GNI is the total amount of money earned by a nation's people and businesses. It
is used to measure and track a nation's wealth from year to year. The number
includes the nation's gross domestic product plus the income it receives from
overseas sources.
 There are three ways of calculating GDP: the output, income and expenditure
methods. Each method should give the same total because they all measure the
circular flow of income.
 circular flow of income is a simplified view of how income flows around the
economy.
 The output method measures the value of output produced by industries such as
manufacturing, construction, distributive, hotel and catering and agricultural
industries or sectors.
 When using the output method, it is important to avoid double counting. So
either the final value of output should be taken or the value added at each stage
of production should be taken.
 The income method is a way of measuring GDP by totaling all the incomes
earned by the factors of production in producing the country's output. Since
transfer payments do not result in the production of a good these must be
excluded from the calculation when calculating GDP by the income method.
 The expenditure method is a way of calculating GDP by totaling all the spending
on the country's output. This includes consumption expenditure by households,
investment expenditure by businesses, government expenditure on goods and
services ( excluding transfer payments) and expenditure by the foreigners on the
country's exports less expenditure on imports by the domestic buyers.
C+I+G+(X-M)
 Market prices are prices paid by consumers, they take into account indirect
taxes and subsidies.
 basic prices (also known asfactor cost) are prices charged by producers before
the addition of indirect taxes and the deduction of subsidies.
  Depreciation of capital goods: is the value of capital goods that have worn out or
become out of date. Depreciation is subtracted from gross values of national
income to arrive at net values of national income.

Formulae
GDP by expenditure method = C+I+G+(X-M)
GDP by expenditure method is GDP at market prices.
GDP at basic prices = GDP at market prices – indirect tax + subsidies
GNI = GDP + net income from abroad
GDP – depreciation = NDP
GNI – depreciation = NNI