National income

National income refers to the total value of all finals goods and services produced in the economy over a certain period of time. That is, national income is obtained when total goods and services are measured in terms of monetary values. So the total product of goods and services which is known as national product, when measured in money value, the national income is obtained. In general, one year’s period is taken to be suitable time period to measure national income. That is, every country of the world measures the national income in the period of one year. Similarly when national product is expressed in monetary values, it is easier to calculate total national product. it will be difficult to find out the aggregate of different goods and services produced in a country due to different measurement unit of such goods and services. Thus, monetary measure is much easier than physical measure. In this manner, all goods and services can be expressed in the same monetary units. That is, there is no other option than monetary units while calculating the total of different goods and services.
Since goods and services are produced with the employment of various factors, the distribution of national product is as for the returns of those factors. That is, wage, interest, profit and rent are obtained as returns for the factors of production labor, capital, entrepreneur and land respectively by their owners. Therefore, national incomes can be expressed in terms of these returns. The share of factor of production will increase if national incomes are increased. As a result, national well-being increases. While calculating national income final goods and services are expressed in monetary values. But intermediate goods and services are not included in the national income because if done so, there will be double counting and national income will be more than real statistics.