Question

Explain the relationship between gross national income and net saving in both short term and long term with relevant economic reasonings.

Answer 1

Gross national income means the total domestic and foreign output claimed by a resident ,including gross domestic product ,in addition factor income earned by foreign resident less income earned in domestic economy by non resident.GNI is the calculation of how much income is earned by resident.

Higher the national income will leads to higher investment in short term.When there is higher earning then people will try to do more savings.These savings leads to more investment.In short term however money is blocked but in long term it will give positive results because then these investment will also produced higher returns.

Hence we can say that if there is increase of gross national income then saving will also increases and it will boost economy in long run.because in long run we will get higher return on this investment.In short tem some problem may be arise but in long term it will also encourage to help in economy.

If there is increase in national income then per capita income will be increases .when per capita income increases then savings will also increases.if saving will be increase then investment will be increases.and higher the investment will leads to higher return in future.