The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method.

One of the first measures the United States took to deal with the financial panic was to raise which of the following? What did the economist John Maynard Keynes believe that governments should do during economic depressions? They used large-scale deficits to finance public works projects and maintain production.

Keynesians believe that, because prices are somewhat rigid, fluctuations in any component of spending—consumption, investment, or government expenditures—cause output to change. If government spending increases, for example, and all other spending components remain constant, then output will increase.

Thus we see that Keynesian analysis of determination of national income is highly important for formulation of fiscal and monetary policies to solve the economic problems of recession and inflation.

GDP is a metric that measures the production level of a country’s economy, commonly defined as the total annual value of the goods and services produced in that country. GDP is one of the well-known economic indicators, widely used by both investors and market analysts.

Yes, it is possible for GDP to be higher than GNP and it is also possible forGNP to be higher than GDP. GNP greater than GDP is best for a country because it means that the populationof that country will have a greater total income (i.e. total output) than if GDPwas greater than GNP.

Closely related to the concept of GNP is another concept called NNP of a country. NNP is a more accurate measure of total value of goods and services by a country. It is derived from GNP figures. As a rough estimate, GNP is very useful indicator of total production of a country.

A country’s GNI will differ significantly from its GDP if the country has large income receipts or outlays from abroad. GNI, therefore, is a better measure of economic well-being than GDP for countries that have large foreign receivables or outlays.

GNI can be much higher than GDP if a country receives a large amount of foreign aid, as is the case with East Timor.

Negatives / Cons of GNI:

• It indicates the income of the whole country, whether it has a population of one billion or one million.
• Again, this measurement can be misleading if there are a lot of super-rich who earn a lot of income, and on the other hand, many people with little/no income.

While it is understood that GNI per capita does not completely summarize a country’s level of development or measure welfare, it has proved to be a useful and easily available indicator that is closely correlated with other, nonmonetary measures of the quality of life, such as life expectancy at birth, mortality rates …