National income and accounting pdf
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National Income Accounting
N ational income accounts NIAs are fundamental aggregate statistics in macroeconomic analysis. The ground-breaking development of national income and systems of NIAs was one of the most far-reaching innovations in applied economics in the early twentieth century. NIAs provide a quantitative basis for choosing and assessing economic policies as well as making possible quantitative macroeconomic modeling and analysis. Combined with population data, national income accounts can provide a measure of well-being through per capita income and its growth over time. Combined with financial and monetary data, NIAs provide a guide to inflation policy.
National accounts or national account systems NAS are the implementation of complete and consistent accounting techniques for measuring the economic activity of a nation. These include detailed underlying measures that rely on double-entry accounting. By design, such accounting makes the totals on both sides of an account equal even though they each measure different characteristics, for example production and the income from it. As a method , the subject is termed national accounting or, more generally, social accounting. National accounting has developed in tandem with macroeconomics from the s with its relation of aggregate demand to total output through interaction of such broad expenditure categories as consumption and investment. National accounts broadly present output, expenditure, and income activities of the economic actors households, corporations, government in an economy, including their relations with other countries' economies, and their wealth net worth. They present both flows measured but it is over a period and stocks measured at the end of a period , ensuring that the flows are reconciled with the stocks.
Finance & Development, June 1968
Understanding how national income is created is the starting point for macroeconomics. This relationship is expressed in the national income identity , where the amount received as national income is identical to the amount spent as national expenditure, which is also identical to what is produced as national output. Throughout macroeconomics the terms income, output and expenditure are interchangeable. See also: the circular flow of income. Since the s, the UK government has gathered detailed records of national income, though the collection of basic data goes back to the 17th Century. National output, income and expenditure, are generated when there is an exchange involving a monetary transaction.
National income is an uncertain term which is used interchangeably with national dividend, national output and national expenditure. On this basis, national income has been defined in a number of ways. In common parlance, national income means the total value of goods and services produced annually in a country.