(a) Distinguish between personal income and national income
(b) Describe any four uses of national income data.
Explanation
The difference between National Income and Personal Income is that:
(a) Personal income is the amount of money received by individuals or households over a given period of time received by individuals or household over a given period. While National income is the money value of the total volume of goods and services produced or the total income earned in a given country over a period of time, usually a year.
(b) Uses of National Income data are as follows:
(i) Economic planning: It provides basic and comprehensive data on the contribution of various sectors of the economy to national output.
(ii) Influences foreign investors: It attracts foreign investment to a country, based on the level of its national income, as investors usually seek countries with rich or fast growing markets
(iii) Assessment of economic performance: The national income statistics are used in assessing the performance of the economy, in other to know the effectiveness or utilization of the productive resources.
(iv) Measurement of standard of living: It shows the general level and prosperity of the people over a given period of time, usually a year.
(v) Redistribution of income: It enables governments to design policy towards redistributing national income and the allocation of resources and revenue among
sectors, within the nation
(vi) Index for classification: It is used for classifying nations into the developed nations and the developing ones in respect of their standard of living
(vii) Estimation of Assets and liabilities: It is also used to estimate the liabilities and assets of nations.
(viii) It equally determines the level of contribution into the international organizations as countries with more per capital income are expected to contribute
more than the poor ones.
(ix) It can also be used as the basis of supply of technical aid and assistance to the needy countries. The international organizations tends to give more technical assistance to poorer nations and this is usually identified by comparing the per capital income of nations.