National Income

Nota:

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

1. GDP

   Nota:

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

   Nota:

   • the flow of income around the economy

   Adjunto:

   • Circular flow of income
   1. Injections

      Nota:

      • causes a rise  Investment Exports government spending
   2. Leakages

      Nota:

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

      Nota:

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

         Nota:

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

         Nota:

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

      Nota:

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

      Nota:

      • 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

   Nota:

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

   Adjunto:

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

   Nota:

   • 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