National Income

National Income

1. GDP

   • the value of all goods and services produced in the economy in a year

2. Circular flow of income

   • the flow of income around the economy
   • Circular flow of income
   • Injections
     • causes a rise  Investment Exports government spending
   • Leakages
     • causes a reduction Savings Imports  Taxtion

3. Measurements

   • Income Method
     • Income from each firm 
     • Incomes-in-kind
       • Non-monetary benefits received by an individual e.g company car
     • Transfer Payments
       • Payments for which no factor of production have been supplied e.g child benefit
   • Expenditure Method
     • Total value of the purchase of goods and services by individuals, firms and government
     • Y=C+I+G+(x-m)
   • Output Method
     • Total value of everything produced by all the services

4. Uses

   • measure economic growth
   • International comparisons
   • standard of living
   • Assist the government in formulating economic policy

5. Limitations

   • inflation
   • populations size
   • distribution of income
   • nature of the goods produced
   • Unrecorded economic activity

6. Multiplier

   • refers to the number of times an injection leads to an increas in national income
   • Multiplier

7. Net factor Income from the rest of the world

   • Refers to the difference between the income earned by foreign firms and individuals in Ireland and the income earned by the irish firms and individuals abroad