CLASS 12 Economics - Introductory MacroeconomicsNational income accounting

In this chapter, we will introduce the fundamental functioning of a simple economy. In section 2.1 we describe some primary ideas we shall work with. In section 2.2 we describe how we can view the aggregate income of the entire economy going through the sectors of the economy in a circular way. The same section also deals with the three ways to calculate the national income; namely product method, expenditure method and income method. The last section 2.3 describes the various sub-categories of national income. It also defines different price indices like GDP deflator, Consumer Price Index, Wholesale Price Indices and discusses the problems associated with taking GDP of a country as an indicator of the aggregate welfare of the people of the country