What Is National Income?

National income is the total value of all goods and services produced by a country in a given period. This is a key concept in macroeconomics because it helps measure the health and growth of an economy.

Gross Domestic Product (GDP)

GDP is the most common way to measure national income. It sums up the value of everything produced within a country's borders. There are three main approaches to calculating GDP:

• Production Approach: Adds up the value of all goods and services produced.
• Income Approach: Adds up all the incomes earned (wages, rents, interest, profits).
• Expenditure Approach: Totals all spending on final goods and services.

Real vs. Nominal GDP

• Nominal GDP measures output using current prices.
• Real GDP adjusts for inflation, giving a more accurate picture of economic growth.

Why Does National Income Matter?

National income statistics help governments and economists understand economic performance, plan budgets, and compare living standards across countries.

Fun Fact

Did you know? If a country’s GDP is growing, it usually means more jobs and better living standards!