The CSO estimates the National Income for Ireland - Leaving Cert Economics - Question 5 - 2009

The three methods used to estimate National Income are:

1. Income Method: Calculates total income earned by factors of production.
2. Output Method: Measures the total output of goods and services.
3. Expenditure Method: Sums total expenditure on the economy's output.

One benefit of using three methods instead of one is Accuracy. Employing all three methods allows for cross-checking the estimates, leading to a more reliable and precise calculation of National Income.

In the formula Y = C + I + G + X - M:

• C (Consumption): Represents total consumer spending.
• I (Investment): Indicates total business investment.
• G (Government): Refers to government expenditures on goods and services.
• X (Exports): Represents the total value of goods and services exported.
• M (Imports): Indicates the total value of goods and services imported.

To calculate the National Income (Y), we use the given formula:

$Y = C + I + G + X - M$

Substituting the values: $Y = €1,500m + €600m + €700m + €150m - €250m$

Calculating:

• Total: €1,500m + €600m = €2,100m
• Adding Government: €2,100m + €700m = €2,800m
• Adding Exports: €2,800m + €150m = €2,950m
• Subtracting Imports: €2,950m - €250m = €2,700m

Thus, the level of National Income is: €2,700m.

The initials GNP stand for Gross National Product. It represents the total economic output produced by the residents of a country, regardless of whether the production occurs within the country or abroad.

1. Lower Standard of Living: A decrease in GNP per person can indicate that individuals have less income available for goods and services, leading to a reduced standard of living.

2. Reduced Savings: With lower GNP, disposable incomes fall, prompting citizens to save less, affecting future investments and financial security.

3. Increased Unemployment: Reduced economic activity may lead to less demand for labor, resulting in higher unemployment rates as businesses cut back on hiring.

1. Increase Government Spending: By increasing spending on infrastructure and public services, the government can stimulate job creation and economic activity, positively impacting GNP.

2. Introduce Incentives for Businesses: Providing tax breaks or grants to businesses can incentivize them to invest and expand, fostering a more favorable environment for economic growth.