National Income

  A system in which goods and services are directly exchanged for other goods without the use of money is called a barter system. In other words, it is the direct exchange of goods for goods. According to Prof Standy, a barter economy is such an economy in which there is no use of a generally accepted medium of exchange. Before the emergence of money, this system was in practice. Nowadays it is not completely eliminated from the economy however its use has become limited. Even in modern times during the monetary crisis or hyperinflation, the system has replaced the use of Money. Disadvantages of Barter System Lack of Double Coincidence of Wants For a successful transaction of goods, the satisfaction of both parties is a must. It means that a person having some good and looking for its exchange with the other good must get that. For example, a person has a piece of cloth and he wants to exchange it with wheat, first of all, he will have to search for such a person who possesses it a...

 Output and employment in a country depending on the size of national income Dr. Alfred Marshall defines National income (or National Divided) thus: Labour and capital of a century acting on its natural resources, produce annually a certain net aggregate of commodities material and immaterial including services of all kinds. The word net means that from the gross value of the output deprecation of capital must be deducted. The concept of national income has three interpretations. 1) It represents a receipts total 2) It represents an expenditure total 3) It arises out of the fact that every expenditure at the same time is a receipt by another and if goods or services bought are valued at their sales prices, we have three fold identities that the value received equals the value paid, equal the value of goods and services are given in exchange. Definition of national income: According to present ideas, national income may be defined as the aggregate factor income (i.e. earnings of la...