An Introduction to National Income
- National income is the total value of the new output of an economy over a period of time
- The output is produced by the physical (machinery) and human capital in the economy
- The output is produced by the physical (machinery) and human capital in the economy
- National income gives an indication of the economic performance of a country
- Nominal and real GDP are often used to measure national income
- A fall in national income may indicate the economy is going into a recession
- A rise in national income indicates the economy is experiencing economic growth
Gross national income
- Gross national income (GNI) is another measure of national income
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It represents the total income earned by a country's residents, both domestically and abroad
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GNI includes the following components
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GDP and Net income from abroad
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Net income from abroad accounts for income earned by residents of a country from their investments or employment in foreign countries, minus income earned by foreign residents within the country
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- It can be calculated in one of two ways
- Using GDP data plus net income from abroad
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- Using income data from the factors of production plus net income from abroad