Group Members
Sneha Desai Kunal Garad Madhuri Thakur Mangesh Talankar Milind Wadkar Ranjit George Mayuri Khedekar Anamika Vispute Pratik Liye Nisha Ahide
National Income
Most important concept of macroeconomic is national income National income represent total the income of nation Measures of national income enables to know the economic growth, business cycle & so on
Economic activities perform by economy are: Production Distribution Consumption Exchange Above activities are based on decision of economics agent i.e. firms and households.
Households
FACTOR INCOMES
Financial markets
Firms
Households
FACTORS OF PRODUCTION
Financial markets
Firms
Households
FP
FI
Financial markets
PGS
I FGS
Firms
TERMS
Y= NATIONAL INCOME C = CONSUMPTION EXPENDITURE I = INVESTMENT SPENDING S = SAVINGS
Y = C + I Y = C + S C + I = Y = C + S I = Y C= S I = S
Contd.
Introduction of government affects the overall economic activity. Total expenditure = consumption + investment + government expenditure (E) = C + I + G Total income received is allocated to consumption , savings & taxes. Y= C + S + T
Contd.
The economy is in equilibrium when the expenditure is equal to income C+I+G=C+S+T I+G=S+T GT=SI
Government
Households
Financial Market s
Firms
Government
World Economy
Government
Financial Markets
Taxation
Govt. spend
Investment Business X M
NATIONAL INCOME
National Income
Sum of values of final goods and services produced in the economy in a year. Sum of all the incomes accruing to factors of production in the economy in a year. Sum of all the expenditures on final goods and services produced in an economy.
National Income
National Income
MEASURMENT
Income Method
Expenditure Method
Add the value of all final goods and services produced in a given year
Income Method
National Income = Sum of all the incomes (Wages, Salaries, Rent, Interest, Profits and Dividends)
Only income earned for productive services are included. (pensions, unemployment benefits are not included)
Expenditure Method
National income =C+I+G+(X-M)
Where, C=consumption expenditure I=Total investment expenditure G=Government expenditure Net receipts from foreign trade(i.e. export(X) - import(M))
3.Net factor incomes from abroad =R-P Where, R=Income received by domestic factors for their contribution to production abroad. P= Income paid to the foreign factors for their contribution to production in the domestic economy
In an open economy GDP = C + I + G + (X M) In an closed economy GDP = C + I + G Where, C=Consumption expenditure on domestically produced goods I=Investment Expenditure G=Government Expenditure (X-M)=Net receipts from foreign trade or net exports
GNP = GDP + Net Factor Incomes from abroad Therefore, GNP = C + I + G + (X-M) + (R-P)
GNP, GDP, NNP and NDP at Market Price and at Factor Cost
Market Prices=Factor Cost + Indirect Taxes Subsidies Factor Cost=Market Prices Indirect Taxes + Subsidies
GNP deflector
Contd.
4. Income from illegal activities 5. Capital gains: gains or losses due to changes in market price 6. Imputed values: valuing of some goods & services that are not sold or bought 7. Inventories
Contd.
5. Depreciation 6. Problems of estimation in developing countries due to lack of Organization Accounting practices Occupational specialization Statistical data