MACROECONOMY

NATIONAL INCOME Ashraf Pulikkamath

ANDGENDER EXCLUSION
MACROECONOMIC
CIRCULAR FLOW OF INCOME
Everything in the
economy are
interlinked!
NATIONAL INCOME
(NI/GDP/GNP)
National Income measures the total value of goods and services
produced within the economy over a period of time.
CSO ( Central Statistical Organisation) is given the task of
estimating the National Income of India & publishes its estimates
in its publication, Estimates of National Income.
ILLUSTRATION: FLOW OF NATIONAL
PRODUCT AND NATIONAL INCOME
METHODS OF
MEASURING NI

Net output (or)

Value added method (or)
Product Method
Factor income (or)
Income Method
Expenditure Method
PRODUCT METHOD (OR)

In this method, national income is measured as a flow of goods and

services. We calculate money value of all final goods and services
produced in an economy during a year. Final goods here refer to
those goods which are directly consumed and not used in further
production.
In the value of final goods, value of intermediate goods is already
included therefore we do not count value of intermediate goods in
national income otherwise there will be double counting of value of
goods.
(OR) VALUE ADDED
METHOD
To avoid the problem of
double counting we can use
the value added method in
which not the whole value of a
commodity but value addition
at each stage of production is
calculated and these are
summed up to get national
income.
 FACTOR INCOME
METHOD (OR)
INCOME METHOD
Known as income method and factor share method.
NI= Rent+ Wage +Interest +Profit
In this method income received by all the basic factors of production
in the production process are summed up.
The income method measures national income from the side of
payments made to the primary factors of production in the form of rent
,wage, interest and profit for their productive services in an accounting
year.
 STEPS IN INCOME
METHOD
1. Obtain Net Domestic Product at Factor cost by summing up factors
payment paid in form of wages and salary ,rent ,interest and profit by
all production units of all sectors in the country.
2. Add Net Factor Income from abroad in Net Domestic Product at
factor cost to obtain Net National Product at Factor Cost (NNP at FC )
or national income.
EXPENDITURE METHOD

It is also known as final product method.

In this method total national expenditure is the sum of
expenditure incurred by the society/economy in a
particular year.
COMPONENTS OF
EXPENDITURE METHOD
GDP = C + I + G + (X – M)
C: Household spending(consumption)
I: Net Domestic Investment Spending
G: Government spending
X: Exports of goods and services
M: Imports of goods and services
NOTES
Income method and Product method are often employed for
calculating National Income. But expenditure method is difficult
method because of the reliability of the data.
Product method is used in Agriculture and Industrial sector.
Income method is used to find the contribution of the service sector
GENDER EXCLUSION?

 Exclusion of gender divisions in our economy outrightly ignores

the value added by women / value added in the social reproduction.
 Social reproduction, otherwise referred as care or domestic work, is
one of the key support system of an economy to function the way it
functions in economic activities.
 These unpaid/unaccounted value addition to the economy is
problematic, fundamentally in national income/macroeconomic
assessments.
 Reference Case: Gary S. Becker’s Theory on Women’s/Family’s
Human Capital – Nobel in Economics 1992
THANK YOU