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Measurement of National Income, Strengths and Weaknesses of National Income Statistics.
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MEASUREMENT OF NATIONAL INCOME, STRENGTHS AND WEAKNESSES OF NATIONAL INCOME STATISTICS Introduction National income is defined as the sum of the incomes accruing to factors of production supplied by normal residents of the given country before deduction of taxes Measures of national income and output are used in economics to estimate the value of goods and services produced in an economy. They use a system of national accounts or national accounting developed by Simon Kuznets in the 1960s. Some of the more common measures are Gross National Product (GNP), Gross Domestic Product (GDP), Net National Product (NNP), and Net National Income (NNI) Analysis Circular Flow of Income The figure below divides the economy into two sections or sectors made up of households and firms. [Source]1 There are two types of flow (an amount per time period) between these groups: A real flow. Households own factor services which they hire out to firms. Factor services are then used to manufacture...
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