National income is the final outcome of all the economic activities of the nation during a period of one year, valued in terms of money.
The objectives of the national income are to ensure that the economic activities are carried out in such a way that majority of people are benefited and the economic growth of the nation is ensured.
Formula to calculate national income.
- C is the consumption.
- G is the government expenditure.
- I is the Investments.
- X is net exports.
- F is the national resident’s foreign production.
- D is the non-national resident’s domestic product.
Therefore, the sum of consumption,government expenditure, investments and net exports, makes up the GDP.
- GDP is the gross domestic product.
Example:
Country X’s GDP in a certain year was worth Sh. 30 billion, its national resident’s foreign production’s value was Sh. 200 million while its non-national resident’s domestic product was worth Sh. 300 million. Determine the country’s national income.
Therefore, the national income of the country is Sh. 30,500,000,000.
