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MEASURING NATIONAL INCOME AND OUTPUT (PROBLEMS OF MEASURING NATIONAL…
MEASURING NATIONAL INCOME AND OUTPUT
COMPONENTS OF MACROECONOMICS
Household
Firms
Government
CIRCULAR FLOW OF INCOME TWO, THREE AND FOUR-SECTOR ECONOMIES :
TWO-SECTOR
Household
Firm
THREE-SECTOR
Firm
Government
Household
FOUR-SECTOR
Firm
Government
Household
Foreign sector
CONCEPTS OF NATIONAL INCOME
GDP
Total market value of all final goods and services produced within a period of time by factors of production within a country
GNP
Total market value of all final goods and services produced by the residents of a country during a given period of time
PERSONAL INCOME
The real income earned by households before they pay their personal income tax
DISPOSABLE PERSONAL INCOME
Income available foe personal consumption expenditure and personal savings
METHODS OF MEASURING NATIONAL INCOME
INCOME APPROACH
Measures national income by looking at the GDP from the perspectives of the sums of income received from the production of the output
EXPENDITURE APPROACH
Measures national income by looking at the GDP from the perspective of total spending on the final goods
PRODUCT OR OUTPUT APPROACH
Measures national income by adding up the net value of all goods and services produced in the country, sector by sector during a year
USES OF NATIONAL INCOME
Standard of living indicators
Government planning and policies
International comparisons
Sectoral contributions
PROBLEMS OF MEASURING NATIONAL INCOME
Non-market transactions
Problems of expertise and modern machinery
Underground economy
Problems of double counting
Problems of non-monetized sector