What is National income and its importance.
Explanation
National income can be defined as the sum total of the money value of all the goods and services produced in a country within a specific period of time, usually a year. In other words it is the sum total of all the incomes received by the factors of production within a period of time.
(i) National income statistics assists the government in planning economic development. Successful planning re-quires fairly accurate figures upon which decisions can be based.
(ii) Average per capita income can easily be obtained if the national income is known.
(iii) National income statistics are used to indicate the overall standard of living of the people. The larger the size of income, the higher the standard of living of the people, provided that the income is equitably distributed.
(iv) The data gathered on people's expenditures, incomes and outputs will put investors in a position to know whether it is worth investing their capital in the country or not.
(v) National income estimates are used to compare the living standards of different countries. This is done on the basis of average income per head.
(vi) National income statistics also give vital information about the different sectors of the economy, their rate of growth, their needs for resource allocation.
(vii) National income figure can show at a glance whether or not the country's economy is growing from year to year and at what rate.
(viii) National income statistics will indicate areas of greatest needs in terms of resources allocations and appropriate measures will be taken to correct the imbalance.