According to the System of National Income Accounting, which of the following statement/s is/are correct ?

i) Gross National Income = GdP + primary income receivable from the rest of the world (row) – primary income payable to the rest of the world.

ii) Gross National disposable Income = Gross National Income + Current transfers receivable – Current transfers payable.

iii) Gross National disposable Income can be divided into Gross Savings and Final Consumption.

The correct answer is Option 4 (All i, ii, and iii).

Key Points

• Gross National Income (GNI) is calculated as GDP + primary income receivable from the rest of the world - primary income payable to the rest of the world.
• Gross National Disposable Income is derived by adding current transfers receivable to GNI and subtracting current transfers payable.
• Gross National Disposable Income can be split into Gross Savings and Final Consumption, in accordance with national income accounting.
• All three statements (i, ii, and iii) are correct in the context of the System of National Income Accounting.

Important Points

• The System of National Income Accounting provides a systematic approach to measure the economic activity of a nation over a period.
• Key metrics like GDP, GNI, and Gross National Disposable Income play a critical role in understanding the financial health and resource allocation of a country.
• Gross National Disposable Income is a broader measure of income as it includes current transfers, which are not part of GNI.
• Final Consumption and Gross Savings are two primary components of Gross National Disposable Income, reflecting how income is utilized within an economy.

Additional Information

• Gross Domestic Product (GDP): It represents the total market value of all finished goods and services produced within a country's borders in a specific time period.
• Gross National Income (GNI): GNI is a measure that expands upon GDP by including net income from abroad (income receivable from ROW minus income payable to ROW).
• Current Transfers: These include unilateral transfers like remittances, grants, and aid, which are not in exchange for any goods or services.
• Primary Income: This includes compensation of employees and investment income (like dividends and interest) received or paid across borders.
• Final Consumption: It refers to expenditure on goods and services consumed by households and the government for immediate satisfaction of needs.
• Gross Savings: Savings are the part of disposable income that is not spent on consumption and is typically used for investment or held as reserves.