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Economic Cooperation Chapter 1

Economic Cooperation Chapter 1

About monetary policy government finance

1. National income
National income is the income that a country’s population receives from the production of goods and services over a period of time, usually 1 year.

1.1 Types of national income are as follows:

1. Gross domestic product is the value of the final goods and services produced within a country in a period of one year.
2. Gross National Product is the value of all the final goods and services that the people of a country produce in a period of one year.
Gross National Product = Gross Domestic Product + Net Foreign Income
3. Net Nation Product is the net value of all the final goods and services produced by the people of a country over a period of one year, minus depreciation of the goods.
Net National Product = Gross National Product – Depreciation
4. National income is the net real value of all final goods and services produced by the people of a country in a period of one year.
National Income = Net National Product – Indirect Taxes + Subsidy
5. Personal income is the income that a person receives from the production of goods and services combined with the portion of income that is not generated by the production of goods and services.
Personal Income = National Income – (Unappropriated Profit + Corporate Income Tax + Social Security Tax + Transfer)
6. Personal net income is the total income that a person receives after personal income tax.
Personal net income = personal income – personal income tax.
7. Average income per person

Average income per person = income per population (N)

1.2 Measurement of national income There are three approaches to measuring national income:
1. Income is a measure of the total income an owner of a factor of production receives by giving his input to a unit of production for the production of goods and services within a period of one year.

National income = rent + wages + interest + profit

2. On the expenditure side, it is the calculation of the total expenditure that people spend on the purchase of goods and services of the country in a period of 1 year. and the accumulation of public, government and private capital, including net exports.

3. Product side It is the total value of the final goods and services produced with national resources within a period of one year.

1.3 Benefits received from national income
1. Used in economic analysis to know the direction of the country’s economy
2. Used to compare the standard of living of the people If any country has high national income would show that there is a high standard of living
3. It is a tool for determining economic policy. Because national income will tell about the current economic state of the country.