The Uses Of National Income Estimates

March 4th, 2009 Comments off
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National Income Accounting cannot be underestimated as it has many major uses. Below tabulates the major uses of National Income Estimates:

  • To measure a country’s growth rate
  • Measure the standard of living, usually high national income indicates high standard of living
  • National Planning-national income figures can assist in future economic planning
  • Indicate changes in income distribution – figures of wages, rent, profits, interests,etc will indicate the country distribution of income
  • Sectorial contributions-enable us to know which sector contributes the most to the economy. This is especially true in reference to output/product approach.
  • Comparison over time; if national income improved steadily over the years, this shows a stable economy with improved productivity
  • Comparision between countries-if GNP per capita is greater than US18,000 the country is considered as an industrially advanced countries whereas those countries with GNP per capital lower than USD 2,000 are considered as the less developed countries
  • To see the government’s expenditure pattern-in the expenditure approach, the pattern of government expenditure is shown on social benefits, defence education,etc

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