How to study National Income? There are so many formulae and concepts... How to grab them all? Please give some tips..
- First go through the basic concepts and formulas of the concerned chapter by referring to the provided study material for this. For this follow the below mentioned path.
Macroeconomics- Chapter 2 (National Income Accounting)- Lesson 4, Lesson 5 and Lesson 7
- You should enlist all the sub-components of each heads such as in Income Method, different sub-components of Compensation of Employees, Operating Surplus, in Expenditure Method Gross Domestic Investment, etc. and learn them thoroughly.
- While solving a numerical, first of all analyze which method is to be used (if it is not mentioned in the question). Begin with writing the relevant formula. Then, proceed with putting a tick-mark on the components as per the formula. Concentrate on the components as per the formula and leave the rest (as sometimes, these may be given merely for confusion). Use these values and get the answer. Always remember that as per the Value Added Method and Expenditure Method, we get GDPMP , whereas, as per the Income Method, we get NDPFC.
Next, you can use these below-mentioned formula to get National Income or NNP FC (or any other macro-economic aggregates).
- GDPMP – Depreciation = NDPMP
- NDPMP – Net Indirect Taxes = NDPFC
- NDP FC + NFIA = NNPFC (National Income)
Rest, the practice will contribute to your precision. So, practice more using our Model Test Papers, Descriptive Tests, etc. to explore variety of questions and gain confidence. In case you get stuck in any numerical, do get back to us.
Microeconomics is generally the study of individuals and business decisions, macroeconomics looks at higher up country and government decisions. Macroeconomics and microeconomics, and their wide array of underlying concepts, have been the subject of a great deal of writings. The field of study is vast; here is a brief summary of what each covers:Microeconomics is the study of decisions that people and businesses make regarding the allocation of resources and prices of goods and services. This means also taking into account taxes and regulations created by governments. Microeconomics focuses on supply and demand and other forces that determine the price levels seen in the economy. For example, microeconomics would look at how a specific company could maximize it's production and capacity so it could lower prices and better compete in its industry. (Find out more about microeconomics in Understanding Microeconomics.) Macroeconomics, on the other hand, is the field of economics that studies the behavior of the economy as a whole and not just on specific companies, but entire industries and economies. This looks at economy-wide phenomena, such as Gross National Product (GDP) and how it is affected by changes in unemployment, national income, rate of growth, and price levels. For example, macroeconomics would look at how an increase/decrease in net exports would affect a nation's capital account or how GDP would be affected by unemployment rate. (To keep reading on this subject, see Macroeconomic Analysis.)While these two studies of economics appear to be different, they are actually interdependent and complement one another since there are many overlapping issues between the two fields. For example, increased inflation (macro effect) would cause the price of raw materials to increase for companies and in turn affect the end product's price charged to the public. The bottom line is that microeconomics takes a bottoms-up approach to analyzing the economy while macroeconomics takes a top-down approach. Regardless, both micro- and macroeconomics provide fundamental tools for any finance professional and should be studied together in order to fully understand how companies operate and earn revenues and thus, how an entire economy is managed and sustained.