Income Flow Definition Economics

Similarly all other economic variables which have time dimension i e whose magnitude can be measured over a period of time are called flow variables.

Income flow definition economics. National income may also be defined as the money measure of the net aggregates of all commodities and services accruing to the inhabitants of an economy during a year. Income y in an economy flows from one part to another whenever a transaction takes place. It describes and measures flow of goods and services which become available to a country during a year. It may be described as the national product or national income or national dividend.

If the flow value of an economic activity is divided by the average stock value during an accounting period we obtain a measure of the number of turnovers or rotations of a stock in that accounting period. Real flows depict the way that commodities and products. Money flows depict the way that money and credit circulate in the economy as income turns into savings and investment and back again. In short an economy is an endless circular flow of money.

The flows of money and goods exchanged in a closed circuit correspond in value but run in the opposite direction. Spending and income continue to circulate around the macro economy in what is referred to as the circular flow of income. The circular flow analysis is the basis of national accounts and hence of macroeconomics. National income is the aggregate money value of all incomes earned by individuals and enterprises.

An income statement is one of the three along with balance sheet and statement of cash flows major financial statements that reports a company s financial performance over a specific accounting. New spending c generates new income y which generates further new spending c and further new income y and so on. Income is used to fund. That is the basic form of the model but actual money flows are more complicated.

National income is a flow. The circular flow of income or circular flow is a model of the economy in which the major exchanges are represented as flows of money goods and services etc. Some accounting entries are normally always represented as a. Income is money or some equivalent value that an individual or business receives usually in exchange for providing a good or service or through investing capital.

Thus the concept national income has different meanings.