Measuring national income

Circular flow of incomeIn the first part of the macroeconomics section of the syllabus we looking at how we can measure national income and the circular flow of income.  We have looked at the circular flow of income as a model to understand how we can measure the level or flow of income in an economy.  One of the important things we need to remember is that if we are measuring the flow around the system then wherever we measure it, then we should get the same value.  This is why if we measure national income (the factor payments), national expenditure (the sum of all the spendings in the economy), or national output (the total level of production in a copuntry) then we get the same result.  We are basically measuring teh same thing, just at different points in the cycle.  Below is the presentation we looked at in the lesson relating to these issues.