BUSINESS ECONOMICS

Business Economics



Business Economics

Introduction

Simon Kuznets, an economist and statistician American original Russian and winner of the Nobel Prize in Economics is the inventor of the Gross Domestic Product in 1934. He won the Nobel Prize in Economics in 1971 for his empirically founded interpretation of economic growth has led to a new and deeper understanding of the economic and social structure and process of development.Kuznets was interested in the system of national accounts; he was actually the creator of the unified U.S. national accounts. Kuznets is noteworthy that although he had worked on the relationship between economic growth and income distribution, was always very critical with the aim to measure welfare solely on the basis of income per capita.The gross national income defined by Simon Kuznet is widely accepted all over the world. But still there is some criticism by some scholars on it. We will be discussing in detail about those aspects in this paper.

National Income

Value of all monetary goods and services produced within a country during the year. You have to add only, without however , the value of goods and services produced that are available s for final consumption or accumulation of wealth , not the intermediate or output s that have been used as input s in a production process back . If you will add the value of all monetary goods and services produced domestically during the year, would be incurred in the so-called error of double counting. For example, if you will add the value of the lumber produced by all the country's forest holdings plus the value of production of sawmills over the value of production of the factory s furniture, the value of wood in trunk would have scored three times, and the value of timber in table twice. To overcome this problem, experts in national accounts use the concept of added value or difference between the value of the output s which produces a firm and the value of the input s to buy other companies. The added value is the value that the company added to the material is and services they purchase to other company s, in the form of salary s wage s of staff, rent s of natural resources (for example, income paid by the lease of land or the rent of a building), the interest of capital taken into loan and profit of the entrepreneur. The income generated by a country in a year is the sum of value added generated by all production units of the country during that year.

National income - calculated in monetary terms the value of the newly created during the year of the total product, which represents revenues generated by all factors of production (land, labour, capital, entrepreneurship). Country's national income is equal to gross national product minus depreciation (depreciation) and indirect taxes. On the other hand, national income can be defined as the sum of all income for the year in the form of wages, industrial and commercial profits, ...