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It also indicates the average living standards within an economy. The CEM definition is as follows:
National income is the extra product wealth generated by an economy during the course of a year.
Within the economy, the two significant groups of decision makers include:
i) Households - factors of production: labour, land, capital and entrepreneurial skill? - buying and consuming goods and services?ii)
Firms - employing these factors of production?
- producing and supplying goods and services
It is obvious that firms employ individuals to manufacture goods and services, but these employees subsequently make up the consumers of their products (either directly or indirectly)...
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