TABLE OF CONTENTS
1.2 Statement of problem/motivation
13 Aims and objectives
1.4 Scope of the study
1.5 Significance of the study
1.6 Definition of concepts
3.1 Research method: regression
Analysis of Data
National income is the sum of the money value of all the
commodities and services produced in a country within a particular
period of time usually one year.
The question of how an economy grows could come to mind
at this juncture. It the amount of goods and services produced by an
economy increases. If it does not increase yearly, it is not growing,
even if it is growing, the rate of growth may not be uniform among
years. Therefore it may not be possible to determine the condition of
In any case, an economy needs an indicator for measuring
economy growth, this indicator is the monetary summation at all the
commodities and service produced in an economy within a particular
period of time usually a year.
To get national income of a country like Nigeria for
instance, we take the list of the goods and services produced in the
country during the year, assign values to them and add up. If we can do
this year after year, we shall be able to make comparison of activities
of Nigeria year after year. Then we can decisively determine whether
the economy of Nigeria is growing, declining or stagnant. It is growing
if the National income increases year after year, declining, if the
National income is decreasing and stagnant it there is no difference in
the National Income for years.
In measuring National Income, an indicator called Gross
Domestic Product (GDP) is used at current price. It is therefore quite
important here to point out the role that prices could play in the
measurement of National Income. Prices of goods and services changes
from time to time. These changes can affect any attempted estimates.
Considerably. Therefore to get an idea of the real physical change in
National Income from year to year, effect of price changes must be
National Income should be measured in real terms and
allow for changes in price levels. For instance whenever the economy
experiences inflation, price rises while the quantities of goods and
services may remain constant. Let us say that 2000, the total units of
the go0ods and services realized in Nigeria amounted to 50,000 units and
also 50,000 units in 2001. Let us further assume that the average per
unit in 2000 was N10.00 while the price in 2001 was N15,000.
Nigeria’s income with GDP as an indicator for 2000 was
50,000 units X N10.00 = N5000,000 Nigeria’s income with GDP as an
indicator for 2001 was 50,000 units X N15.00 = N750,000.
If the two figures were presented to a layman as final
products of overall estimates for 2000 and 2001, he would be tempted to
say that the National income for 2001 was higher than that of 2000.
This is so monetarily but really the income for both year are equal.
The difference in value was due to rise in p rice in 2001 while the
quantities of goods and services were the same in both years.
The same thing can be applicable when a country
experience deflation or depression. Therefore in measuring national
income for different years using gross domestic product as an indicator
effects of price changes must be given the normal due. In so doing the
changes in economy can be determined appropriately.
STATEMENT OF PROBLEM/MOTIVATION
As a result of poor economic condition in Nigeria
relevant information is of great interest to me for investigation if
viable economic solution can be revealed.
Nigeria considered as one of the third world countries is
been assessed by their income yearly. It is a simple logic of our
living that it country’s income is high with considerable population,
the enjoyment of the citizens of that country would be high, while the
enjoyment is low with low national income. It is on this point that I
find it very expedient to analyze the national income of Nigeria and
make necessary recommendation for the improvement of the economy for the
betterment of the citizenry.
AIMS AND OBJECTIVES
In view of Nigeria’s economic predicament, the project is
aimed at investigating the relationship existing between disposable
income, savings and government final expenditure for the purpose of
suggesting solutions to our economic problems.
After the regression analysis had been carried out, it will supply solution to the following questions:
1. Is any linear relationship between the variables listed?
2. How reliable is our regression coefficient?
3. Can we predict the future value of dependent variable?
4. How reliable will be our estimate?
SCOPE OF THE STUDY
The study is centre on “National Income, Savings and
Government Final Consumption Expenditure Covering the period of six
years 1998 – 2003.
The raw data used are collected as primary data by
federal office of statistics” publication and Federal Ministry of
Finance Publication. The data are collected as primary data by federal
office of statistics and used as secondary data in this project which
centered on national Accounts. Some of these National Accounts
Aggregates Include Gross Domestic Product (GDP) final consumption
expenditure, exports and imports.
National Accounts data presents the record of economic
transaction of the economic in a systematic manner and show the
relationship between the various components of the economy. Economic
transaction cover all the activities of an entity (Household,
government, firm, financial institution) that are of economic nature
(production, consumption distribution, savings and foreign exchange
transactions. These economic transactions of all the entiti8tes and
combined together ad presented inform of account.
Data collected for analysis in this study center on:-
1. Appropriation of disposable income as dependent variable.
2. Savings as one of the independent variable
3. Government final consumption expenditure as another independent variable.
SIGNIFICANCE OF THE STUDY
The study will help to know the status of Nigeria
economy. The knowledge of the status will help to make necessary
recommendation in order to revitalize the poor economic condition of the
country for the better future.
The study will also create avenue for future research.
DEFINITION OF CONCEPTS
Gross Domestic Product (GDP): This is the sum of the money value
of all locally produced goods and services. It does not include
international transaction. GDP does not make allowance for depreciation
Gross National Product (GNP): This is the total money value of
current market prices of all final goods and services produced by the
nationals during a specific period. It includes net income from abroad
in respect of the country’s nationals without any consideration for
depreciation of capital.
National Domestic Product (NDP): This is the total value of all goods
and services produced in a country in a period of time. It exclude the
value of the net earnings and incomes from abroad. An allowance being
made for depreciation of capital.
Net National Product (NNP): This is the monetary value of
all goods and services produced within the country during a specific
period. It includes net incomes and earning from abroad and provision
being made for the replacement of depreciation of capital.
Disposable Income (DPI): This is the amount of money per year
that private sector are free to spend when depreciation of capital, all
taxes, all net profits made by firms but not paid out as divided are
added to the disposable and transfer payment subtracted. We arrive at
gross national product.
Net Economic Welfare (NEW): This examines those
factors not considered when calculating the Gross National Product
(GNP). Such factors include social cost 9pollution) and leisure time
the net economic welfare tend to remove the product (GNP). A nation
might have a very high GNP at a very great social cost as pollution,
rising crime etc.
Per Capita Income (PCI) This is the gross domestic product divided by
the population of the country. Per capita income can be calculated once
the population and gross domestic product are known. So that P.C.I