National income accounting

[[File:GDP Categories - United States.png|175px|thumb|National Income Accounting via the expenditure approach in the USA. ]]
{{Economics}}
National Income Accounting is a [[statistical]] procedure used to measure and aggregate [[economic]] activity within a country. National Income Accounts (NIAs) are fundamental in conducting [[Macroeconomics|macroeconomic]] policy and understanding macroeconomics more generally.<ref>"[https://www.britannica.com/topic/national-income-accounting National income accounting]". ''Encyclopedia Britannica.'' Retrieved January 26, 2020.</ref> 

==History==
National Income accounting can be traced to the early modern period in England.<ref>Maddison, A. (2007). ''Contours of the world economy 1-2030 AD: Essays in macro-economic history.'' Oxford University Press. p249-287.</ref> In the 1930s it became much more formalized when economist Simon Kuznets published his work on national income for the [[United States]] [[Congress]]. Kuznets had developed time series of national income in order to develop a quantitative basis for studying and measuring economic growth and the shifts in production from agriculture to industry to services. As the 20<sup>th</sup> century progressed, national income accounting was refined and improved into what it is today.<ref name="nia">"Ott, Mack. [https://www.econlib.org/library/Enc/NationalIncomeAccounts.html National Income Accounts]". ''Econlib.'' Retrieved January 26, 2020.</ref>

==Expenditure approach==
The expenditure approach is a means by which national income is calculated by aggregating total spending. All final purchases are tallied within a given time-frame in a specified location. Common expenditure approach methods include 
*[[Gross Domestic Product]]
*[[Net Domestic Product]]
*Gross National Product

==Income approach==
The income approach is a means by which national income is computed from people's incomes. The actual earnings of the citizens and firms are totaled over a period of time in a specified location. Examples include 
*[[Gross Domestic Income]]
*[[Net Domestic Income]]
*[[Gross National Income]]
*[[Net National Income]].

==Application==
NIA is important in assessing the health and growth of a nation's economy. They are also vital in policy making, as NIAs serve as a feedback mechanism to understand the effectiveness of [[Monetary policy|monetary]] and fiscal policy. Knowing how big an economy is and how fast it has been growing lets policymakers understand the impacts of [[taxes]], spending, trade, and monetary policy.<ref name="nia"/>

==Potential inaccuracies==
Obvious issues with NIAs may come from governments manipulating data to exaggerate growth rates or income levels.<ref>[https://www.bloomberg.com/news/articles/2019-03-08/china-s-gdp-growth-pace-was-inflated-for-nine-years-study-finds China's GDP Growth Pace Was Inflated for Nine Years, Study Finds]. March 7, 2019. ''Bloomberg''.</ref> Other problems arise from issues in calculating [[inflation]], especially over a long period of time.<ref>Kenton, Will. "[https://www.investopedia.com/terms/n/national_income_accounting.asp National Income Accounting]". ''Investopedia.'' Retrieved January 26, 2020.</ref>

==References==
{{reflist}}

[[Category:Economics]]
[[Category:Statistics]]

Categories: Economics, Statistics