National Income Accounting Definition Economics

National income accounts provide information on the pattern of economic activity.

National income accounting definition economics. Pigou has in his definition of national income included that income which can be measured in terms of money. These include detailed underlying measures that rely on double entry accounting. Difference between gdp and gnp the uses of national income statistics. Thus national income accounts can be defined as a set of systematic statements which reflect the aggregate money value of all goods and services produced in different sectors of an economy primary secondary and tertiary sectors together with the records of distribution of factor incomes among different groups and final expenditures either gross or net of the economy.

These also help policy makers in formulating good economic policies both in government and in private industry. These statistics explain various economic and social phenomena. As a method the subject is termed national accounting. The progress of a country can be determined by the growth of the national income of the country.

In other words the final outcome of all the economic activities of the nation during a period of one year valued in terms of money is called as a national income. By design such accounting makes the totals on both sides of an account equal even though they each measure different characteristics for example production and the income from it. The national income is the total amount of income accruing to a country from economic activities in a years time. It has proved to be more practical also.

National accounts or national account systems are the implementation of complete and consistent accounting techniques for measuring the economic activity of a nation. It does not interpret analyze or judge and thus it is only one step in the analytical process of measuring a country s economic activity. It includes payments made to all resources either in the form of wages interest rent and profits. In turn it is generally not a good way to measure the welfare of a population or a country s happiness national income accounting is also not all inclusive.

This is why national income statistics are closely watched by businesses and governments at all levels. National income accounting is a government bookkeeping system that measures a country s economic activity offering insight into how an economy is performing. Such a system will include total. National income measures the monetary value of the flow of output of goods and services produced in an economy over a period of time.

In the words of pigou national income is that part of objective income of the community including of course income derived from abroad which can be measured in money this definition is better than the marshallian definition. National income accounting is a term that refers to measuring the health of an economy the economic activity and the forecasted growth and development during a particular time period.