What is national income? It's meaning and definitions.
MEANING
National Income is a term which has been used synonym to national dividend, national output and national expenditure. On this basis National Income has been defined in a number of ways.
In common words, National Income means the total value of goods and services produced annually in a country.
In other words, the total income accruing to a country from economic activities in an year's time is known as national income. It includes payments made to all resources in the form of wage, interest, rent and profits.
DEFINITIONS
The definitions of national income can be grouped into two classesclasses:-
Traditional Definitions and Modern Definitions.
1) TRADITIONAL DEFINITIONS
A) Marshall's definition - According to Marshall, " The Labour and capital of a country acting on its natural resources produce annually a certain net aggregate of commodities, material and immaterial including services of all kinds. This is the true net annual income or revenue of the country or national dividend. "
B) Pigovian definition - According to Pigou, " National income is that part of objective income of the community, including ofcourse income derived from abroad, which can be measured in money. "
C) Fisher's definition - According to Fisher, " The National Income consists solely of services as received by ultimate consumers, whether from their material or from the human environments. Thus a piano or an overcoat made for me this year is not a part of this year's income, but an addition to the capital. Only the services rendered to me during this year by these things are income. "
2) MODERN DEFINITIONS
A) Simon Kuznet's definition - According to Kuznet,' the net output of commodities and services flowing during the year from the country's productive system in the hands of the ultimate consumers is known as the national income. '
B) Reports of United Nations," In the words of United Nations Reports, national income has been defined on the basis of the systems of estimating National income, as net national product, as addition to the shares of different factors, and as net national expenditure in a country in a year's time. "
In practice, while estimating National Income, any of the definitions may be adopted, because the same national income would be derived, if different items were correctly included in the estimate.
National Income is a term which has been used synonym to national dividend, national output and national expenditure. On this basis National Income has been defined in a number of ways.
In common words, National Income means the total value of goods and services produced annually in a country.
In other words, the total income accruing to a country from economic activities in an year's time is known as national income. It includes payments made to all resources in the form of wage, interest, rent and profits.
DEFINITIONS
The definitions of national income can be grouped into two classesclasses:-
Traditional Definitions and Modern Definitions.
1) TRADITIONAL DEFINITIONS
A) Marshall's definition - According to Marshall, " The Labour and capital of a country acting on its natural resources produce annually a certain net aggregate of commodities, material and immaterial including services of all kinds. This is the true net annual income or revenue of the country or national dividend. "
B) Pigovian definition - According to Pigou, " National income is that part of objective income of the community, including ofcourse income derived from abroad, which can be measured in money. "
C) Fisher's definition - According to Fisher, " The National Income consists solely of services as received by ultimate consumers, whether from their material or from the human environments. Thus a piano or an overcoat made for me this year is not a part of this year's income, but an addition to the capital. Only the services rendered to me during this year by these things are income. "
2) MODERN DEFINITIONS
A) Simon Kuznet's definition - According to Kuznet,' the net output of commodities and services flowing during the year from the country's productive system in the hands of the ultimate consumers is known as the national income. '
B) Reports of United Nations," In the words of United Nations Reports, national income has been defined on the basis of the systems of estimating National income, as net national product, as addition to the shares of different factors, and as net national expenditure in a country in a year's time. "
In practice, while estimating National Income, any of the definitions may be adopted, because the same national income would be derived, if different items were correctly included in the estimate.
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