How Does National Income Affect National Income

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QUESTION 1 (A) National Income is the amount of money within a county and affects the gross domestic product through the macroeconomics. Income per capita may becalculatedby the average amount of money for the particular individual of group. It is useful by evaluating how the standard of living is and the prosperity of the people in the specific places. This income per capita is indicate how much money each person earns including the salaries, wages and any self-employment income for every man, women and child regardless of the ages. To calculate the income per capita: Income per capita =total amount of income estimated by selecting the people of all ages / the total number of all people of the country. Hence, the total value of market income must should equal the total value of final output, or GDP. (B) The…show more content…
Thirdly, income per capita calculations did not considering the consequences of inflation. Due to inflation, the prices getting higher, demand and supply getting lower. Therefore, the people who earned high income (consider wealthy) had tend to spend more and getting richer. While people who only earned lower income (consider poorer) had tend save their money and getting poor. Hence, the outcome income per capita will be unnaturally stated as the richer getting rich and poorer getting poor. Besides, rapidly increase in prices also led to overstated value. 4. Moreover, Australia, different countries have different value of money due to the exchange currency rates. Therefore, in order to compare income per capita of Australia with the rest of countries would lead to the decimal value results that are inaccurate. 5. The statistic value or value of money didn’t represent the high standard of living, or income per capita. It may due to the long working hours not because of earning high incomes. The more they have to work means high level of stress led to reducing the leisure time, which minimize standard of living or less happiness in their daily

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