Data on National accounts are essential for economic management.
• Gross Domestic production comprises three sectors agriculture, Industry and
services.
• The importance of economic structural changes with relative contribution
of economic sector to gross domestic production, can be analyzed..
• Considering the structure of gross domestic production, economic policies can be
implemented to uplift the relevant economic sectors.
• National income accounts can be used to illustrate the distribution of income among
factors of production.
• This shows the percentages of incomes distributed to labour and property
assures.
• National accounts can be used to evaluate the economic condition of a country and
international comparison.
• Per capita income is computed with the ratio between National income / production
and mid year population of the country.
National Income / production
Per-capita Income = ___________________________
Midyear population
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• Economic growth is explained as the continuous increase in real national out put.
• Economic growth can be measured with the gross National production at constant
prices .
• The following limitations can be seen when preparing the National income accounting
data.
• Transaction of non market activities
• Illegal economic activities
• Informal economic activities
• Increase in quality of production
• Non-consideration of the influence of the environment.
• Excluding the interest payments on government debt.
• Transaction of non market activities are
•Household services in a household.
•Services of self employment.
•Subsistence economic activities
• National production is under estimated as non-inclusion of the above effective
economic activities.
• Examples of illegal economic activities are
• Illegal production and sales of liquor, prostitution, bribery and corruption military
and insurgent activities.
• Through income and expenditure flows occur in all these activities, the value of
National production is underestimated because they are not included.
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• Informal economic activities are explained as the activities performed by poor
people and are not recognized by the government
• characteristics of informal economic activities areas are as follows.
• Informal documentation
• Depends on family labour.
• Failure to count for tax payments and social security contributions.
• Failure to conform to various government rules and regulations
• Production values derived from the above economic activities are not officially
reported,therefore, National accounts are under estimated.
• When calculating National accounts only quantity is considered but not increase in
quality.
• Unfavorable influence on the environment when the production process is explained as
environmental deviation.
• Because of these unfavorable influences to welfare are not included, National income
is overestimated.
• Considering these effects of environment national accounts are adjusted are called
green national accounts.