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National income
The document discusses how a nation determines its national income and whether the results are always accurate. It describes three common methods used to calculate national income - the product or output method, income method, and expenditure method. It then provides details on Nepal's economy, the main sources and composition of its national income, and challenges in obtaining accurate measurements due to issues like a lack of records, unstable politics, and income from illegal activities.
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National income
- 1. Macroeconomics Topic: National Income “How Does a nation determine the National Income?” Are the results always accurate? www.company.com
- 2. Group Members • Chhitiz Shrestha • Digaj Amatya • Dhundup Tsering Lama • Manzil Bhattarai • Narayan Gurung • Niraj Taujale • Nirmal Shrestha www.company.com
- 3. Need to StudyNational Income • The overall size of the country’s economy. • Economic growth trends in comparison to the previous year’s performance and the nation’s economic health. • The contribution of various production sectors to the national economy. • Future growth prospects. www.company.com
- 4. Nepal: Economic Overview •Among the poorest and least developed countries in the world, • One-third of its population living below the poverty line • Agriculture is the mainstay of the economy, providing a livelihood for three-fourths of the population and accounting for about one- third of GDP www.company.com
- 5. Nepal: Economic Overview •Industrial activity mainly involves processing of agricultural products, like – Pulses, – Jute, – Sugarcane, – Tobacco, etc. • Has considerable scope for exploiting its potential in hydropower, with an estimated 42,000 MW of feasible capacity www.company.com
- 6. Nepal: Economic Overview •Challenges to Nepal's growth: – Political instability – Technological backwardness, – Landlocked geographic location, – Civil strife and labor unrest, – Its susceptibility to natural disaster www.company.com
- 7. Methods to calculatethe National Income • Product or Output Method: – Utilizes the overall value of goods and services produced by the country, – The output of a production unit can be the input for another unit, – Hence, this method suffers from ‘double counting.’ • Income method: – Utilizes the overall income generated by various factors of production – Includes employee wages, income of self- employed people, profits earned by business houses, etc. www.company.com
- 8. Methods to calculatethe National Income • Expenditure method: – Sum of all the expenditures incurred by the economy, – The formula to calculate aggregate expenditure is: • E = C + I + G + (X-M) – Where, – E = Expenditure – C = consumer expenditures – I = domestic investment – G = total value of government expenditures www.company.com
- 9. Sources of NationalIncome • Agriculture – Pulses, – Rice, – Corn, – Wheat, – Sugarcane, – Jute, – Root crops, – Milk, – Buffalo meat www.company.com
- 10. Sources of NationalIncome • Industries – Tourism, – Carpets, – Textiles, – Cigarettes, – Cement, – Brick production, www.company.com
- 11. National Income ofNepal • GDP (Purchasing power parity): – $33.26 billion (2009 est.) • GDP (Official exchange rate): – $12.47 billion (2009 est.) • GDP (Real growth rate): – 4.7% (2009 est.) • GDP (Per Capita): – $1,200 (2009 est.) www.company.com
- 12. National Income ofNepal • GDP (Composition by sector): – Agriculture: 35% – Industry: 16% – Services: 49% • www.company.com
- 13. National Income ofNepal GDP (Composition by sector) 16% 35% Agriculture 49% Industry Services www.company.com
- 14. National Income ofNepal • www.company.com
- 15. Comparison with Bangladesh& Bhutan www.company.com
- 16. Comparison with Bangladesh& Bhutan www.company.com
- 17. Comparison with Bangladesh& Bhutan www.company.com
- 18. Problems of calculatingNational Income (Is it accurate?) • Lack of proper records • Unstable Political scenario • Lack of in depth data research • Data gaps • Lack of skilled experts • Income from Illegal activities • Radical change in the price level • Depreciation www.company.com
- 19. Conclusion • National incomenot totally reliable • Lot of items excluded • Non-conventional estimating procedure used • Gives somewhat approximate values • Yet, vital in planning for the future • Provides necessary statistics • National Income – very important! www.company.com
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