National Income Accounting

What is National Income Accounting?

National income accounting is a bookkeeping system that a government utilises to measure the degree of the nation’s economic pursuits in a provided time frame. Accounting records of this nature incorporate information regarding total revenues earned by domestic firms, wages paid to domestic and foreign labourers and the amount spent on sales and income taxes by firms and individuals inhabiting in the nation.

Purpose in Economic Analysis

The data accumulated through national income accounting can be utilised for a variety of causes, such as evaluating the current standard of living or the allocation of income within a populace. Additionally, national income accounting furnishes a methodology for contrasting pursuits within distinct sectors in an economy. A meticulous analysis can help in deciding an all inclusive economic rationality within a nation.

In this chapter 2 of Macroeconomics, we shall learn the basic fundamental operating structure of a simple economy. We can elucidate some key ideas we shall learn. Also, this chapter explains the various subcategories of national income. It also explains distinct cost price indicators like –

  • Gross Domestic Profit (GDP) deflator
  • Consumer Price Index (CPI)
  • Wholesale Price Indices and analyses the issues linked with taking GDP of a nation as an indicator of the average welfare of the people of the nation

The above mentioned is the concept that is explained in detail about National Income Accounting. To know more, stay tuned to BYJU’S.