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Problems of Comparing the Standard of Living and the Per Capita Income of one Country to another

Inaccurate data and differences in computation method: Many of the figures used in the computation of both the national income and population estimates are inaccurate. The method of computation varies from one country to another, which makes it difficult for the data or figure to be compared with each other. Price Level: Differences in the…

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Reasons for Low Per Capita Income and Low Standard of Living in West African Countries

(i) Inadequate supply of capital: Without enough capital, countries cannot embark on capital projects that will lead to an increase in production and the national income. Hence, due to low productivity, income level is also low. (ii) Inadequate infrastructural facilities: The insufficient infrastructural facilities (both social and economic) discourage investments and slows down economic activities,…

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Limitations of the National Income Estimates

The national income estimates, though very useful, have some limitations when applied in the areas of usefulness stated in Uses of national income estimates. (i) Income Distribution not shown: The estimates do not reveal how the income is distributed among the people of the country. It fails to show whether it is widely distributed or…

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General Problems Associated with the Calculation of the National income

(i) Double counting: Capital goods are goods bought for the purpose of further production while consumer goods are goods bought and consumed immediately. Double counting occurs when the cost of capital goods are included in the cost of the final product. This leads to overstatement of the national income figure. In Nigeria, and other West…

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Factors that Determine the National Income

(i) The quality and quantity of the available factors of production in a country greatly affects its national income as poor quality input implies low national income. (ii) The level of technological know-how available to a country determines its level of national income. The higher the level of technical know-how, all things being equal, the…

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Different Ways of Measuring National Income and their Problems

There are three approaches to the Measurement of National Income and these are the Output Approach, the Income Approach and the Expenditure Approach. Output Approach The output approach to the measurement of national income measures the monetary value of all goods and services produced by the various sectors of the economy. In using this method,…

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