National Income:
National income is the total value a country’s final output of all new goods and services produced in one year. Understanding how national income is created is the starting point for macroeconomics.
A quite simple but powerful analytical model built around buyers and sellers pursuing their own self-interest (within rules set by government). It’s emphasis is on the consequences of competition and flexible wages/prices for total employment and real output. Its roots go back to 1776 in Adam Smith’s Wealth of Nations. The Wealth of Nations suggested that the economy was controlled by the “invisible hand” whereby the market system, instead of government would be the best mechanism for a healthy economy.
