National Income And Theory Of Money

 Definition of National Income:

A term used in economics to refer to the bookkeeping system that a national government uses to measure the level of the country's economic activity in a given time period. National income accounting records the level of activity in accounts such as total revenues earned by domestic corporations, wages paid to foreign and domestic workers, and the amount spent on sales and income taxes by corporations and individuals residing in the country.

The total net value of all goods and services produced within a nation over a specified period of time, representing the sum of wages, profits, rents, interest, and pension payments to residents of the nation.(Economics) Economics the total of all incomes accruing over a specified period to residents of a country and consisting of wages, salaries, profits, rent, and interest

.

Definition of Theory Of Money:

An economic theory which proposes a positive relationship between changes in the money supply and the long-term price of goods.  It states that increasing the amount of money in the economy will eventually lead to an equal percentage rise in the prices of products and services. The calculation behind the quantity theory of money is based upon Fisher Equation:

This theory originated in the sixteenth century as European economists noticed higher levels of inflation associated with importing gold or silver from the Americas. 

According to how the formula is derived, holding the transaction volume and velocity of money constant, any increases in the money supply will yield a proportional increase in the average price level.