How To Determine The Amount Of National Income

Table of contents:

How To Determine The Amount Of National Income
How To Determine The Amount Of National Income

Video: How To Determine The Amount Of National Income

Video: How To Determine The Amount Of National Income
Video: Measurement of National Income| Income method| Expenditure Method| Production Method| Measure GDP 2024, March
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Macroeconomic indicators characterize the general financial situation in the country, serve to analyze its future opportunities and summarize the results. To determine the size of the national income, you need to add up the income received by all citizens.

How to determine the amount of national income
How to determine the amount of national income

Instructions

Step 1

For the typification of the main economic indicators of states, the System of National Accounts was formed. This made it possible to compare data for different countries and identify certain macroeconomic patterns and relationships. All indicators of the system are interconnected and calculated according to certain methods. For example, the amount of national income can be determined in two ways.

Step 2

The national income of the state is the difference between the gross national product, the amount of depreciation of fixed assets and indirect taxes: ND = GNP - AM - KN.

Step 3

The gross national product consists of the primary income of residents received not only from production activities within the country, but also abroad. It is believed that non-productive activities, i.e. services are not included in this concept.

Step 4

Amount of amortization AM is a set of expenses aimed at reducing or eliminating the wear and tear of fixed assets of enterprises, both physical (deterioration of quality, loss of material properties) and moral (obsolescence of equipment, change in production technologies, etc.). The difference between the number of GNP and AM is called net national income.

Step 5

Indirect business taxes are tax payments that are expressed as a premium to the price of a product. Thus, their payer is not an entrepreneur, but a consumer, and the amount goes to the state budget, therefore it appears in the formula with a minus sign.

Step 6

The second method for determining national income is the summation of all incomes of citizens of the country received in the reporting period. This value includes: wages, profits from industrial and commercial activities, interest on deposits and land rent.

Step 7

National income is an important component of the system of international accounts. This indicator characterizes the economic development of the country and the financial situation of its citizens. Unlike GDP and GNP, it is not an indicator of production.

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