Top 5 Elements of National Income Economics Students Must Know

Economics is one of those basic subjects that are considered worthy to get specialization due to their demand and fascinating career in the market. If you are an economic student ad want to pursue your career in the field of economic then you must keep yourself aware of the current economic news ad trends. You must have an in-depth knowledge of all the basic concepts and key terms of economics. In this article, experts of dissertation writing services will discuss National Income (NI), one of the most important factors of economics. The national income shows the economic activity of a country. National income stated in simple words is the value of goods and services produced by a country with its territory in a specific time period.

What Are the Ways for Measuring National Income?
There are three different ways for measuring national income; product method, income method, and expenditure method. In the production method, the national income is calculated by calculating the value of all final goods and services (goods are completely used and are not further used for the production of other goods) produced in one year. In the income method, the income through the four factors of production is calculated as the national income. The four productions are capital (interest), labor (wages), land (rent), and entrepreneurship (profit). The value of total expenditure is considered as national income in the expenditure method.

For knowing the economic growth of a country it is important to check the national income of a country. The national income tells about the standards of living of the citizen of a country. It tells about the growth rate of the economy, political and economic conditions, contribution of foreign investors, performance of different sectors within an economy, contribution to international organizations, and it tells about the consumption and expenditures of the citizens of a country. Thus national income is important to know for planning the economic and political activities of a country.

Factors for Determining the National Income
Some basic factors are used to determine the national income of any country.

• Available natural resources. The more natural resources a country possesses the more will be its national income.
• Development in the Industrial Sector: when the industrial sector of a country is more stable it will have an increase in national income.
• Technological Advancement: the more advanced and high-level technology in a country more will be the national income.
• Working Population: the more number of employed people greater will be the income.
• Economic Activities: strong economic stability will increase the national income while the instability in economic activities will lower the national income.
• Factors of Production: the more factors of production available in a country more will be its national income.
• Political Stability: Political stability will bring more national income.

What are the Elements of National Income?
There are five basic components or elements of national income.

• GDP
• GNP
• NNP
• PI
• DPI

GDP (Gross Domestic Product):
The total value of all the goods produced within the boundaries of a country in one year is called the gross domestic product (GDP) of a country for that year. The gross domestic product includes consumption, expenditure, investment, and net foreign exports.

GNP (Gross National Product):
The value of all the goods and services produced within the boundaries of the countries and goods and services produced by the nationals of the country outside the geographical boundaries of the country are added and the value of income received by the foreigners within the country is minuses from this value for calculating the gross domestic product of a country. The gross national product includes the total consumption, total investment, total government expenditures, income from abroad, and total exports after deduction of imports.

NNP (Net National Product):
We get the value of the net national product by subtracting the depreciation from gross national product.

PI (Personal Income):
The total income earned by the individuals of a country after paying all the taxes is considered as personal income.

DPI (Disposable Personal Income):
When the direct taxes are minus from the personal income the remaining value is considered s the disposable personal income.