Trends And Structure of National Income - SS2 Economics Lesson Note

Understanding the trends and structure of national income can provide valuable insights into the economic performance of a country. It can help identify areas of strength and weakness, and inform policy decisions related to economic development and social welfare.

Trends in National Income:

Over time, national income tends to increase due to economic growth. However, the rate of increase may vary depending on factors such as technological advancements, political stability, and access to resources. National income may also experience fluctuations due to economic cycles such as recessions and booms.

Structure of National Income:

National income can be broken down into different components, including consumption, investment, government spending, and net exports. Consumption refers to the spending by households on goods and services, while investment includes spending by businesses on capital goods such as machinery and equipment. Government spending includes spending by the government on goods and services such as education and defense, while net exports refer to the difference between exports and imports.

The structure of national income can provide insights into the sources of economic activity within a country. For example, a high percentage of investment spending may indicate strong business activity and potential for future growth. A high percentage of government spending may indicate a larger role for the government in the economy, while high levels of consumption may indicate a healthy consumer market.