National income determination, Microeconomics

National Income Determination:

National Income Determination deals with what determines the size of a nation’s national income. The size of a nation’s national income is determined primarily by the size of its planned aggregate expenditure.

This is planned total spending in an economy on domestically produced goods and services within a specified period of time. It is determined as the sum of planned spending by all sectors of the macro economy represented as household spending on consumption (C), firms (I), government (G), exports (X) and imports (M)
Equilibrium national income occurs when the total level of output produced in the economy exactly matches the level of planned total spending (aggregate expenditure) in the economy.

The Multiplier analyses the magnifying effects of changes in leakages and/or injections on equilibrium income.

The accelerator principle deals with the relationship between net investment, the stock of capital and the level of income or output. The principle indicates that net investment will take place only when aggregate output is increasing.

Posted Date: 1/3/2013 12:10:17 AM | Location : United States

Related Discussions:- National income determination, Assignment Help, Ask Question on National income determination, Get Answer, Expert's Help, National income determination Discussions

Write discussion on National income determination
Your posts are moderated
Related Questions
Commodities that are viewed as luxuries typically have price elastic demand, and commodities that are requirements have price inelastic demand.  There is easily no substitute for a

Problem 1 (a) Explain the evolution of exchange rate system in Mauritius. (b) According to you, what factors determine exchange rates in the long run? Problem 2 "Inf

When the curve that envelops the sweries of possible short-run average total cost curves is horizontal, this means that they are a. economies of scale, b. dieconomies of scale, co

Suppose that doctors shift away from a fee-per-visit system and are instead paid set annual salaries. What effect will this have on the supply and demand situation for the health

Measuring the Economic Value of Education A review of research works regarding the economic value of education shows that it developed in four different directions. They a

A trend line can be fitted through a series graphically. Old values of sales for different areas are plotted on a graph and a free hand curve is drawn passing through as many point

During the 1990s, technological advance reduced the cost of computer chips. Explain, with the use of supply and demand diagrams, how the following markets are affected in terms of

Question: (a) Explain the factors that contributed to the adoption of structural adjustment programme by a majority of Least Developed Countries in the 1980s? (b) Describe t


The sales of a company are the part of the total sales of industry. If the conditions of industry changes then the sales of each of the firm in the industry is affected. All teh ti