2.1 Definition Of National Income

2.1 DEFINITION OF NATIONAL INCOME

National Income

National income refers as the flow of goods and services that can be obtained by a nation for a certain period, usually in a year.

National Income Accounting

National income accounting can be refer as the government bookkeeping system that measures the health of an economy, projected growth, economic activity, and development during a certain period of time.

It helps in assessing the performance of an economy and the flow of money in an economy. The double entry system principle of accounting is used to prepare the national income accounts.

National Income Accounting Equation

The national income equation represents the relationship between national income and the economy’s expense, along with other attributes, as shown in the following equation:

Y = C + I + G + (X - M)

Where:

Y : National income

C : Consumption

I : Investment

G : Government expenditure

X : Exports

M : Imports