National income
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www.company.com Macroeconomics Topic: National Income “ How Does a nation determine the National Income?” Are the results always accurate?
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Assignment, Macro-Economics, BBA-BI 2nd semester, Ace Institute of Management
Transcript of National income
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MacroeconomicsTopic: National Income
“How Does a nation determine the National Income?”
Are the results always accurate?
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Group Members
• Chhitiz Shrestha• Digaj Amatya• Dhundup Tsering Lama• Manzil Bhattarai• Narayan Gurung• Niraj Taujale• Nirmal Shrestha
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Need to Study National 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.
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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
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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
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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
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• 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.
Methods to calculate the National Income
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• 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
Methods to calculate the National Income
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• Agriculture– Pulses,– Rice,– Corn,– Wheat,– Sugarcane,– Jute,– Root crops, – Milk, – Buffalo meat
Sources of National Income
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• Industries– Tourism, – Carpets, – Textiles, – Cigarettes, – Cement, – Brick production,
Sources of National Income
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• 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.)
National Income of Nepal
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• GDP (Composition by sector):– Agriculture: 35% – Industry: 16% – Services: 49%
•
National Income of Nepal
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National Income of Nepal
49%
35%
16%
GDP (Composition by sector)
AgricultureIndustryServices
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•
National Income of Nepal
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Comparison with Bangladesh & Bhutan
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Comparison with Bangladesh & Bhutan
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Comparison with Bangladesh & Bhutan
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• 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
Problems of calculating National Income (Is it accurate?)
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• National income not 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!
Conclusion
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Thank you
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