National income refers to the aggregate monetary value of all final goods and services produced in a country during a given period, usually one year. The term “final goods and services” is important because it excludes intermediate goods in order to avoid double counting in national income estimation. From the expenditure approach, the total value of final goods and services produced in an economy is measured as:
National Income = C + I + G + (X – M)
where C is consumption expenditure, I is investment expenditure, G is government expenditure, and (X – M) represents net exports. Evaluating the options:
- Option (a) is not correct because it refers to production by nationals, which corresponds more closely to Gross National Product (GNP) rather than the general production within the country. - Option (b) is incorrect because consumption + investment alone does not represent the full value of output, as it excludes government expenditure and net exports. - Option (c) is incorrect because national income is not simply the sum of personal incomes, since it includes all factor incomes generated in production, including corporate and undistributed incomes. - Option (d) correctly reflects the money value of final goods and services produced, which aligns with the broad definition used in national income accounting. Therefore, the correct answer is (d) Money value of final goods and services produced.