Importance of estimation of National Income of a country:
1. Planning and decision making; forecasting etc.
2. Measure of economic performance and Comparison
3. Policy formulation and implementation
4. Property ownership – determination of the size of private foreign direct investment (FDI)
Problems of measurement of National Income:
1. Incomplete/Inadequate information
2. Double counting
3. Changes in prices
4. The problem of inclusion, in terms of:
- Subsistence output (income)
- Intermediate goods
- Housing i.e. rent on owner – occupiers
- Public Services provided by the government
- Foreign payments i.e. net income from abroad
- Illegal activities eg. smuggled output
- Revaluation of assets.
Wilfykil answered the question on February 6, 2019 at 10:50
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Assume the following information represents the National Income Model of an „Utopian? economy.
Y = C + I + G
C = a + b(Y – T)
T = d + tY
I = IO
G = GO
Where a > O; O < b < 1
d > O; O < t < 1
T = Taxes
I = Investment
G = Government Expenditure
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Date posted: February 6, 2019. Answers (1)
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Assume the following information represents the National Income Model of an „Utopian? economy.
Y = C + I + G
C = a + b(Y – T)
T = d + tY
I = IO
G = GO
Where a > O; O < b < 1
d > O; O < t < 1
T = Taxes
I = Investment
G = Government Expenditure
Explain the economic interpretation of the parameters a,b,d and t.
Date posted: February 6, 2019. Answers (1)
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Date posted: February 6, 2019. Answers (1)
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