National income(509b at 1990prices)

National expenditure method:

1 Consumers expenditure not houses, PDI-savings

2 General government final consumption(current) no loans+transfer payments+exp.by govn institutions(harbours)

3 Gross domestic fixed capital formation.

4 value of physical increases in stocks and work in progress

5 Exports-imports

6 Statistical discrepancy

National income method

1 Income from employment

2 -"-self-employment

3 Gross trading profits of companies

4 -"-public corporations

5 -"-general govn enterprises

6 Rent

7 Imputed charge for the consumption of non-trading capital(own houses)

8 -stock appreciation(gain in value)

9 stat

Personal disposable income-PI - tax=savings+consumption. Savings ratio 1989-6.7%, high in 70s.

National output

Manufacture biggest (oil), services increases

-Adjustment for financial services(interest payments)

Care for double counting

Nat Income limitations

1 no sector by sector breakdown

2 variations and linkages among components

3 difficult to measure

4 Different national incomes per head(Size of population).

5 The distribution of income (Lorenz curve).UK Wealth less evenly distributed than income.

6 Inflation and the GDP deflator(RPI only consumer spending)

7 Government expenditure (progressive tax makes more even).

8 Non-monetary transactions (growing own food, in Kenya 25% allowance is made, in developed countries negligible)

9 Tax evasion (black market).

10 Leisure. (UK has longest working week and biggest working population although developing countries might have even more).

11 International comparisons -

a Exchange rates fluctuate after 1971

b Prices and inflation differ

c Transport costs

d Subsistence economy(growing own 25%Kenya)

govn expenditure pattern

e Standard of living depends:income, life expectancy, IMR, doctors per1000, durable goods(house), freedom of speech/religion, literacy,