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USES OF NATIONAL INCOME STATISTICS, PROBLEMS OF MEASURING NATIONAL INCOME …
USES OF NATIONAL INCOME STATISTICS
Standard of Living Indicator
can be measured by GDP per capita
"the higher the increase in consumption opportunities, the higher the increase the standard of the living"
can be compared based on two different perspectives
compare the standard of living over time
compare the standard of living across countries
Government Planning and Policies
very useful tool for the government to formulate their economic planning
can guide the policymakers in planning for the future
improve the current level of the economy or take the right corrective decisions
Sectoral Contributions
primary sector
agriculture, forestry, mining and quarrying
secondary sector
manufacturing and construction
tertiary sector
electricity, gas and water
International Comparisons
make international comparisons of people's living standards or real income
compare the economy size of one economy relative to another
PROBLEMS OF MEASURING NATIONAL INCOME
Problems of Non-Monetized Sector
makes computation of the national income more challenging
difficult to measure the national income
Underground Economy
avoid paying taxes may cause a loss in government income revenues and sales, which are not reflected in the GDP
Non-market Transactions
a number of productive work is carried out in the economy which do not involve payment
no money changes hands and subsequently mo payments are recorded
Problems of Expertise and Modern Machinery
the lack of professionals
non-availability of modern machinery
data collected on national income has to be analyzed using sophisticated machinery
Problems of Double Counting
will appear when both values of final goods and intermediate goods are included