What is National Income

&NewLine;<&excl;-- WP QUADS Content Ad Plugin v&period; 2&period;0&period;95 -->&NewLine;<div class&equals;"quads-location quads-ad1" id&equals;"quads-ad1" style&equals;"float&colon;left&semi;margin&colon;0px 0px 0px 0&semi;">&NewLine;&NewLine;<&sol;div>&NewLine;<p align&equals;"justify">National income is the total income of a country and does not include the incomes from illegal sources&period; There are three different approaches to measure the national income of a country i&period;e&period; income method&comma; product method&comma; and expenditure method&period; Since three different methods are used for the measurement of national income therefore it can be explained in three different ways&period; <&sol;p>&NewLine;<h3>&&num;160&semi;<&sol;h3>&NewLine;<h3>Income Method <&sol;h3>&NewLine;<p align&equals;"justify">&&num;160&semi;<&sol;p>&NewLine;<p align&equals;"justify">According to income method&comma; national income is the aggregate of all individual incomes plus the income of government&period; People receive their incomes from four factors of production i&period;e&period; land&comma; labor&comma; capital and entrepreneurship in the form of rent&comma; wages&comma; interest and profit&period; Therefore the aggregate of all such incomes of all the residents of a country during one year&comma; is called national income of the country&period; Here we should note that national income does not mean income of the government alone rather it is the aggregate of incomes of all nationals of a country&period; <&sol;p>&NewLine;<h3>&&num;160&semi;<&sol;h3>&NewLine;<h3>Product Method <&sol;h3>&NewLine;<p align&equals;"justify">&&num;160&semi;<&sol;p>&NewLine;<p align&equals;"justify">In case of product method&comma; national income is the money value of all the final goods and services produced in a country throughout the year&period; Therefore the money value of primary and intermediate goods should not be added because it will cause double counting&period; For example the value of shirt is taken and not of cotton&comma; because the value of cotton is already included in the value of the shirt&period; There are various sectors in the economy such as transport&comma; agriculture&comma; communication&comma; manufacturing&comma; services etc&period; The net money value of total production of these sectors in a given year is then added to get the national income&period; <&sol;p>&NewLine;<h3>&&num;160&semi;<&sol;h3>&NewLine;<h3>Expenditure Method <&sol;h3>&NewLine;<p align&equals;"justify">&&num;160&semi;<&sol;p>&NewLine;<&excl;-- WP QUADS Content Ad Plugin v&period; 2&period;0&period;95 -->&NewLine;<div class&equals;"quads-location quads-ad2" id&equals;"quads-ad2" style&equals;"float&colon;none&semi;margin&colon;0px 0 0px 0&semi;text-align&colon;center&semi;">&NewLine;&NewLine;<&sol;div>&NewLine;&NewLine;<p align&equals;"justify">According to expenditure method&comma; national income is the aggregate of total expenditure done by the people and government during a year&period; This method works on the principal i&period;e&period; for every dollar of income there is a dollar of expenditure&period; It means that every dollar spent on a good or service is income to somebody&period; Therefore national income is calculated by taking the aggregate of all expenditures done by people as well as government&period; <&sol;p>&NewLine;<h3>&&num;160&semi;<&sol;h3>&NewLine;<h3>Concepts of National Income <&sol;h3>&NewLine;<p align&equals;"justify">&&num;160&semi;<&sol;p>&NewLine;<p align&equals;"justify">There are different concepts of national income which describe how and where national income is produced&comma; what part is distributed and after deducting taxes&comma; how much is left with the people to spend&period; Some of the important concepts of national income which are used differently in economic theory and analysis are given below&period; <&sol;p>&NewLine;<p align&equals;"justify">1&period;&&num;160&semi;&&num;160&semi;&&num;160&semi; Gross National Product &lpar;GNP&rpar; <br &sol;>2&period;&&num;160&semi;&&num;160&semi;&&num;160&semi; Gross Domestic Product &lpar;GDP&rpar; <br &sol;>3&period;&&num;160&semi;&&num;160&semi;&&num;160&semi; Net National Product &lpar;NNP&rpar; <br &sol;>4&period;&&num;160&semi;&&num;160&semi;&&num;160&semi; National Income &lpar;NI&rpar; <br &sol;>5&period;&&num;160&semi;&&num;160&semi;&&num;160&semi; Personal Income &lpar;PI&rpar; <br &sol;>6&period;&&num;160&semi;&&num;160&semi;&&num;160&semi; Disposable Income &lpar;DI&rpar;&NewLine;<&excl;-- WP QUADS Content Ad Plugin v&period; 2&period;0&period;95 -->&NewLine;<div class&equals;"quads-location quads-ad3" id&equals;"quads-ad3" style&equals;"float&colon;none&semi;margin&colon;0px&semi;">&NewLine;&NewLine;<&sol;div>&NewLine;&NewLine;