National Income

Syllabus tag: KCSE | Business Studies | Form 3 | Topic 20 National Income

Lesson objectives

By the end of this topic, you should be able to:

• Define national income and the related terms.
• Describe the circular flow of income, its injections and withdrawals.
• Describe the three approaches to measuring national income and their problems.
• State the uses of national income statistics and the factors affecting its level.

Summary

National income is the total value of goods and services produced in a country in a year. The circular flow shows income moving between households and firms, altered by injections (investment, government spending, exports) and withdrawals (savings, taxes, imports). It is measured by the output, income and expenditure approaches, which should all give the same total.