National Income Essay -- Income Economy Economics Essays

National Income National income is a measure of the value of the output of the good and services produced by an economy over a period of time. It is defined as a flow of output. Economic essay National income is a measure of the value of the output of the good and services produced by an economy over a period of time. It is defined as a flow of output. A reason why we need to collect national income figures is to provide an accurate estimate of changes in the volume of output produced during one year, which can then be compared with other years. In order to see what has happened to the real national income when two years are compared, we must remove the effects of inflation on the prices of data, so that we don't obtain misleading data. National income can be measured by GDP, GNP and NNP. GDP is the Gross Domestic Product; it is the value of output produced by factors of production located within a certain country. GNP is Gross National Product; this measures the total value of output produced, and incomes received by a country's residents from the ownership of resources, wherever these happen to be located. GNP therefore takes account of the fact that some of that country's residents earn incomes such as rent and profit from owning resources located abroad. Therefore GNP includes the full value of plant and equipment produced during the course of a year. Net national product is Gross National Product minus Depreciation. Depreciation is the decline of existing plant and equipment over a period of time, that id declined due to wear and tear and obsolescence. NNP is the aggregate that is most usually taken to mean national income. GNP is more of the official measure for national income, however ... ...wever not because it has a outstanding economy but because of all the oil it exports. In reality Oman doesn't offer a wide variety of goods or services and therefore its standard of living is perhaps worse than countries with lower GNP's. Â · Also a country's GNP may be high, however most of the output it might produce may be exported, meaning that locals don't have all these outputs to choose from and so there standard of living isn't that great. Therefore using national income to make international comparisons of living standards has its benefits and limitations, however the limitations that arise are far greater than the advantages. However currently it the most efficient method to use for making international comparisons for standard living and until a new more reliable procedure is created, it is the one that we are obliged to use.