BBA Economics & Macroeconomics Study Notes
Methods of Measuring National Income
National income is the total value of all final goods and services produced in a country in one year. Economists use three main methods to measure it. Ideally, all methods give the same value.
1. Product Method (Output Method)
This method calculates the value of all final goods and services produced in the country.
How it Works
- Sectors: Agriculture, Industry, Services
- Exclude intermediate goods
- Measure at market price (GDP-MP)
Key Points
- No double counting
- Use market prices
- Accurate when production data is strong
Example
Output = 100b (rice) + 50b (cement) + 200b (services) = 350 billion
2. Income Method
This method adds all incomes earned by the factors of production.
Incomes Included
- Wages
- Rent
- Interest
- Profit
Formula
NI = Wages + Rent + Interest + Profit
Example
NI = 200 + 50 + 40 + 80 = 370 billion
3. Expenditure Method
This method sums all spending on final goods and services.
Components
- C (Consumption)
- I (Investment)
- G (Government)
- (X − M) Net Exports
Formula
Y = C + I + G + (X − M)
Example
Y = 300 + 100 + 150 + 20 = 570 billion
Conclusion
Total Production = Total Income = Total Expenditure
| Method | Measures | Focus |
|---|---|---|
| Product | Final output | Production sectors |
| Income | Factor incomes | Wages, rent, interest, profit |
| Expenditure | Total spending | C, I, G, Net exports |
Capitalistic, Socialistic & Mixed Economy – Easy Notes
1. Capitalistic Economy
Private ownership, freedom, competition, profit motive.
2. Socialistic Economy
Government ownership, equality, welfare-focused.
3. Mixed Economy
Both private and government sectors work together.
Capitalistic, Socialistic & Mixed Economy – Easy Notes
1. Capitalistic Economy
Private ownership, freedom, competition, profit motive.
2. Socialistic Economy
Government ownership, equality, welfare-focused.
3. Mixed Economy
Both private and government sectors work together.
Browse Complete BBA Study Materials →
| S.N. | Microeconomics | Macroeconomics |
|---|---|---|
| 1 | Individual units | Whole economy |
| 2 | Small decisions | National issues |
| 3 | Demand, supply, price | GDP, inflation, unemployment |
| 4 | Small picture | Big picture |
Uses of Macroeconomics in Business Decision Making
- Understand demand
- Guide pricing
- Plan investments
- Forecast economy
- Understand policy impact
- Manage risks