What is National Income

National Income is the money value of the final goods and services produced by a country during a period of one year. It is Also known as Net National Income.

National Income consist of a collection of different type of goods & services as these goods are measured in different physical unit it is not possible to add them together so we need a accurate medium in which we could convert anything.

Definations Of National Income

A number of professors and economist gave definition of National Income which can be easily understandable are as follows-

According to Prof. Pigou

"The national dividend is that part of the objective income of the community including, of course, income derived from abroad, which can be measured in money …” According to Prof. Pigou, only those goods and services should be included (double counting being avoided) that are actually sold for money.

According to Prof. Simon Kuznets

"It is the net output of commodities and services flowing during the year from the country’s productive system in the hands of the ultimate consumers or into the net addition to the country’s capital goods.”

According to Prof. Fisher,

"The national dividend or income consists solely of services as received by ultimate consumers, whether from their material or from their human environment. "

According to Prof. Simon Kuznets,

"It is the net output of commodities and services flowing during the year from the country ’s productive system in the hands of the ultimate consumers or into the net addition to the country’s capital goods.

According to noble Prize Winner Prof. Samuelson says

"It is the loose name we give for the money measure of the overall annual flow of goods and services in an economy.”

Prof. Ackley defines national income as the sum of all:

(a) Wages, salaries, commissions, bonuses, and other forms of employee earnings;
(b) Net income from rentals and royalties;
(c) Interest income, and
(d) Profits.

National Income Concept

How to measure National Income