National income is an indicator of a country's welfare

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:55

In macroeconomics, there is such a thing as national income. This is an economic indicator that characterizes the total primary income of all residents of the country. At the same time, this indicator is calculated as the sum of not only the results of economic activity within the country, but also abroad (the income of residents who have left abroad is considered), as well as income paid to other states.

National income is the sum of the country's primary cash receipts, which were included in the gross national product, and those profits that were received from abroad minus funds given abroad. This indicator can also be studied as the sum of all incomes (wages, payments on shares, bonds, interest on deposits, etc.) of the branches of material production.

For the first time, the founders of Marxism-Leninism began to consider the national income in isolation from production activities. The pioneer, the "father" of this indicator was W. Petit - an English economist. Further, his teaching was developed by the physiocrats, A. Smith and D. Ricardo. However, none of them had the strengthfully understand the concept of national income. Only K. Marx managed to do this. It was he who began to consider not only the income of all segments of the population, but also the very cost of output. Marx was the first to consider separately such a concept as a consumption fund and such a concept as an accumulation fund. He also gave a full description for each indicator, explaining their functional load. The legendary teaching of K. Marx was continued by V. Lenin.

At this stage, there are a huge number of interpretations of the judgments of the great creators, but they all, in the end, have the same meaning.

National income is the difference between net national product and indirect taxes. This also includes subsidies and subsidies issued by the state to businesses. Similarly, it will come out if we consider this indicator as a net product of the entire society or a newly created value. Net National Product (NNP) is the difference between a country's gross national income and depreciation charges.

Different methods can be used to calculate national income. In the USSR, the production method was used. It summarizes the gross output of each industry, each production, belonging to different types of property. After that, the next step is to calculate all the material costs expended for production. When subtracting the found amount of material costs from the gross output, the desired value is obtained - the national income. The formula looks like this:

VP - MZ=ND, where

VP - gross output; MZ - material costs; NI - national income.

After analyzing for each industry and adding the resulting figures, you can find the national income of the country.

Gross output created in a year consists of two parts - newly created and previously created product. For example, at a factory that produces furniture, they take into account fittings, a variety of components that were used in the manufacture of furniture. But these details have already been taken into account at the factory. Therefore, when calculating gross output, double counting is possible, which cannot be said about national income (after all, all costs are excluded).