AGRICULTURAL ECONOMICS AND MATHEMATICS


NATIONAL INCOME
            National income is the total value of a countries  final output of all new goods and services  produced  in one year. It   is certain that to understand  how national income is created  how national  income is crated is the starting point for  macroeconomics “
NATIONAL  INCOME ACCOUNTS 
Since the 1940s  the UK government has gathered detailed records of national income, though the collection of basic data goes back to the  17th   century .  the published national
income account for the UK called the  ‘BLUE BOOK”   measure  all the economic  activities  that ‘add value”   to the economy.
ADDING VALUE
National output, income and expenditure  are gathered when there  is  an  exchange  involving a monetary transaction. However, for an individuals economic transaction  to be included  in aggregated national income  it must involve the purchase  of  newly   produced goods or services. In other words it must create a genuine addition to the value of  the scarce resources for instance a  transaction that involves selling a second hand good, and which was new  two  years  ago does not add to national income ,   through the original production and  purchases   does.  Transactions which do  not  add  value are called  transfers,  and  they includes l second hand  sales,  gifts  and  such as disability  allowance   and    state pensions
THE  NATIONAL INCOME IDENTITY 
This  relationship  is expressed in  the national income  identity, where the amount received a national income is identical  to the amount spent as national  expenditure, which is also identical to what is  produced as national output. Throughout macroeconomics the terms income,  output  and expenditure   are interchangeable
THE CREATION OF NATIONAL  INCOME
The simplest way to think about national  income is to consider what  happens when one  product is manufactured and sold  typically, goods are produced in a number of stages  where raw materials are converted by firms at one “stage” than  sold to  firms at the next   stage.  Blue is added  at  each  intermediate, stage, and at the final stage ,  the   product is giving  a retail   selling price. The  retail prince reflects the value  added in terms of all the resources  used in all the previous stages of production
FINAL  OUTPUT
In accounting  terms,  only the value of  final output is   recorded . to avoid  the problem of double  counting, only  the value  of the final  stage,  the  retail price  is  included and not the value added in all the intermediate stages,  the costs  of  production.  Plus profits. Infact national income is the value of all the final output of goods and services produced in one year
For instance, for one to consider the production of a motor car which has a retail price of N250,000  and  this price  includes  N210,000  for all the cost of production,  N60,000 for component, N10,000  for assembly, N500  for marketing and N40,000 as profit for one to avoid  double counting  the national income accounts  only  record the value  of the final  stage, which is  at the selling price  of N250,000
There are   three methods of  calculating national income
1.       The  income methods : This  system add up all incomes received by the factors of  production generated in the economy  during  a year. This includes wages from  employment and self employment,  profits  to firms , interest to senders of  capital and rents to owners of land
2.       The  output method:  which involve the combined value of the new and final output produced in all sectors of the economy. Including manufacturing financial services transport, leisure and  agriculture
3.       Expenditure  method : this system add up all spending in the  economy by households  and firms  on new and final  goods and   services by  households and firms
Thus gross domestic product (GOP) is the most important   aggregate  of national income  for accounting  purposes and  for  economic  analysis 

DEPT:  AGRICULTURAL ECONOMICS
COURSE CODE:  AEM 553
COURSE TITLE :  AGRICULTURAL MATHEMATICS
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