National Income

Annotations:

• measures the income earned by the permanent residents of a country in a year

1. GDP

   Annotations:

   • the value of all goods and services produced in the economy in a year
2. Circular flow of income

   Annotations:

   • the flow of income around the economy

   Attachments:

   • Circular flow of income
   1. Injections

      Annotations:

      • causes a rise  Investment Exports government spending
   2. Leakages

      Annotations:

      • causes a reduction Savings Imports  Taxtion
3. Measurements
   1. Income Method

      Annotations:

      • Income from each firm 
      1. Incomes-in-kind

         Annotations:

         • Non-monetary benefits received by an individual e.g company car
      2. Transfer Payments

         Annotations:

         • Payments for which no factor of production have been supplied e.g child benefit
   2. Expenditure Method

      Annotations:

      • Total value of the purchase of goods and services by individuals, firms and government
      1. Y=C+I+G+(x-m)
   3. Output Method

      Annotations:

      • Total value of everything produced by all the services
4. Uses
   1. measure economic growth
   2. International comparisons
   3. standard of living
   4. Assist the government in formulating economic policy
5. Limitations
   1. inflation
   2. populations size
   3. distribution of income
   4. nature of the goods produced
   5. Unrecorded economic activity
6. Multiplier

   Annotations:

   • refers to the number of times an injection leads to an increas in national income

   Attachments:

   • Multiplier
7. Net factor Income from the rest of the world

   Annotations:

   • Refers to the difference between the income earned by foreign firms and individuals in Ireland and the income earned by the irish firms and individuals abroad