WASSCE SHS
National income is the value of the goods and services produced by a country's factors of production over a period, usually a year.
It can be measured as the output produced, as the incomes earned by producing it, or as the expenditure on it. In principle the three totals match, because one person's spending is another person's income. Gross domestic product is the output produced inside the country, whoever owns the factors. Gross national product adjusts for income earned abroad and income paid to foreigners. You do not need a live figure for any country. The question is what the total includes and what it leaves out.
A rise in the total can come from higher prices rather than more goods. That is why real national income, which removes the price change, is the one to use when you ask whether output grew. Even a real rise does not mean every person is better off. Population may have grown faster than output, so income per person fell. And the total says nothing about how evenly the income is shared. Those limits are part of a full answer. Quoting a pretended figure is not.
Distinguish a definition from a use. "It measures living standards" is a use, and it is only partly true, so it is a weak definition. Mention at least one limit if the question says "how useful" or "how far". Real versus money, population, and distribution are the three limits markers expect. Do not invent a GDP number. None is required.
These are practice questions in the style of the paper, with a model answer and a mark scheme. They are not a promise of what your paper will ask.
5 marks
(a) Define national income. (2 marks)
(b) Name the three ways it can be measured. (3 marks)
(a) The value of goods and services produced by a country's factors of production over a period.
(b) Output, income and expenditure.
2 marks
Explain why a rise in money national income may not mean that output has risen. (2 marks)
Prices may have risen. The same goods then have a higher money value. Real national income removes that price change.
2 marks
Give one reason a higher real national income may still leave the typical citizen no better off. (2 marks)
Population may have grown as fast as output, so income per person did not rise. Or the extra income may have gone to a few people.
More questions on this topic are inside GLearn, marked as you answer, with the reason written out. The first ones need no account.
Practise Economics freeThe value of the goods and services a country's factors of production produce over a period. It can be added up as output, as incomes, or as expenditure. The three approaches are meant to agree.
Not by itself. Prices may have risen, population may have grown, and the extra income may be unevenly shared. Real income per person, and some sense of how it is distributed, tell you more than the money total. All WASSCE Economics past questions