Calculating National Income Essay

INTRODUCTION

Many types of measures of national income and output are used in economics to get an estimate about the economic activity in a country or a region. In this report I am going to write about two different methods of calculating national income and discuss about the main components of those two approaches.

NATIONAL INCOME

National income is the total value of goods and services which a country produces in a particular period of time. National Income includes the payments that are made to all resources in the form of interest, wages, profit and rents. The length of this period is usually one year.

The growth rate and measuring the level of national income is important for a country to:

• Know the rate of economic growth

• Know the changes to average living standards

• Know the

If this difference is positive, it is added to the GNP and if it is negative, it is deducted from the GNP.

(Chand, National Income: Definition, Concepts and Methods of Measuring National Income, n.d.)

HOW MALDIVES CALCULATE NATIONAL INCOME

In Maldives, the national income is calculated by using the gross national income method. Gross national income (GNI) is used to measure the income of a country. It contains all the income that is earned by the country's businesses and citizens, including the incomes of citizens who are abroad. Product taxes (minus subsidies) not already counted also comes under the Gross National Income. The foreigner’s income is not included in this.

CONCLUTION

Measuring the national income of a country is really very important for a country. It enable a country to know how its economy is performing and it provides the government with a lot of important economic information such as;

• National Expenditure Pattern

• Important information about the various sectors of production

• How the income is