National Income

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TABLE OF CONTENTS
SECTION 1…………………………………………………………………………………….3 1.0Introduction ………………………………………………………………………………...3 1.1 Historical background of national income …………………………………………………3 1.2. Overview of issues of National income in the world………………………………………3 SECTION 2……………………………………………………………………………………5 2.1.Definition of national income ………………………..........................................................5 2.2. Factors that determine national income…………………………………………………...6 2.3.Methods to measure national income………………………………………………………6 2.4.Treatment of national income from abroad………………………………………………...8 2.5. Uses of national income statistics …………………………………………………………8 SECTION 3…………………………………………………………………………………...10 3.1 Challenges faced by developing countries in measurement of their national income. …..10 3.1.1Conceptual or theoretical difficulties………………………………………………….10 3.1.2Practical difficulties ………………………………………………………………….12 3.2. National income and welfare ………………….……………………………………..14

SECTION 4 …………………………………………………………………………………16 4.1 Recommendations ……………………………………………………………………….16 4.2 Conclusion ……………………………………………………………………………….16

SECTION 1
1.0INTRODUCTION
This paper aims at providing a detailed discussion on the concept of national income and challenges that are faced by developing countries in the measurement of their national income. Under section one, a brief introduction of the structure of the paper and overview of issues regarding national income worldwide is given. Section two, illustrate the concept of national income, section three discusses challenges that are faced by developing countries in measurement of their national incomes and section four layout recommendations and conclusion. 1.1HISTORICAL BACKGROUND OF NATIONAL INCOME.

Arriving at a figure for the total production of goods and services in a large region like a country entails a large amount of data-collection and calculation. Although some attempts were made to estimate national incomes as long ago as the 17th century, the systematic keeping of national accounts, of which these figures are a part, only began in the 1930s, in the United States and some European countries. The impetus for that major statistical effort was the Great Depression and the rise of Keynesian economics, which prescribed a greater role for the government in managing an economy, and made it necessary for governments to obtain accurate information so that their interventions into the economy could proceed as well-informed as possible. (Wikipedia; 2012)

1.2OVERVIEW OF ISSUES OF NATIONAL INCOME IN THE WORLD.
In every country there is a body which is responsible for keeping the national accounts and produces statistics through them. National income plays a crucial role in the economy of the country and these includes; Determination of the level of aggregate demand of goods. Determination of the business level and environment in a country. Its distribution pattern determines the pattern of demand for goods and services. However keeping the national accounts is not an easy exercise, there are stiff challenges that are always faced across the world and these includes Conceptual difficulties and

Practical difficulties.
In chapter three of the paper the usefulness and challenges concerning national incomes will be explained in details with examples.

SECTION 2
2.1DEFINITION OF NATIONAL INCO ME.
National income is the sum total of wages, rent, interest, and profit earned by the factors of production of a country in a year. Thus it is the aggregate values of goods and services rendered during a given period counted without duplication. (Varun; 2012) There are various concepts of National Income. The main concepts of national income are: gross domestic product (GDP), gross national product (GNP), NNP, NI, PI, DI, and PCI. These different concepts explain about the phenomenon of economic activities of the...
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