Answer to Question #1791 in Macroeconomics for tiffany

Question

Why is national income measurement so important to assess economic performance of a country's economy?

Answer 1

National income is important to assess economic performance of a country’s economy because:
- it is the money value of the flow of output of goods and services produced within an economy over a period of time;
- it provides various purposes regarding economy, production, trade, consumption, policy formulation, etc;
- it shows speed of the economic growth in relation to previous years;
- the composition and structure of the national income shows various sectors and the periodical variations in them;
- it shows projection about the future development trend of the economy;
- it helps business firms in forecasting future demand for their products;
- it makes international comparison of people’s living standards.