CHAPTER ONE

1.1       BACKGROUND OF THE STUDY
Econometric is a policy measures adopted in controlling inflation, employment and increasing the national output which can be meaning if we tend our appeals to empirical investigation.
This research work employs the method of econometrics to evaluate the national output of the federal republic of Nigeria.
Econometrics is the application of statistical methods for testing and quantification of hypothetical economic relationship using data. It is with the aid of econometrics that we discriminate between competing economic theories and put numerical clothing onto the successful ones.
The central bank of Nigeria (CBN) was established by the central bank act of 1958, although legal banking of CBN recently rest mainly in the central bank of Nigeria degree no 24 of 20th June, 1991, which supersedes the acts.
The promulgation of the degree marked on important epoch because of the expanded powers conferred on the CBN to execute its primary functions as well as a collecting and using all aspects of needed statistics.
The central bank of Nigeria (CBN), in her process of executing this primary, functions returns, which are made to include both operational and administrative statistics.
These are processed to provide the balk of monetary statistics.

1.2       SIGNIFICANCE OF THE STUDY
The role of finance in a developing country such as ours cannot be over emphasized. This is because finance is one of the major inhibiting factors in the transformation of our economy from the developing one to a modern industrialized society.
This study is carried out to aid the government in economic planning and to provide useful aids in judging achievement in economic growth through national income statistics.

1.3       AIMS AND OBJECTIVES OF THE RESEARCH.

• To estimate the consumption expenditure functions over gross national income for the purpose of prediction.
• To estimate the relationship that exists between consumption expenditure and gross national income.
• Fitting a regression equation of gross national income over years for the purpose of prediction.
• To forecast the future consumptions based on gross national income trend value.
• To test if there is significant differences in averages of government final consumption expenditure and private consumption expenditure.

1.4       SCOPE OF THE STUDY
The information used in this study is extracted from the central bank of Nigeria (cbn) financial and economic review of 1992 – 2011.
The study was to cover gross national income and consumption expenditure meant of the federal republic of Nigeria.
Basically, econometrics methods of analysis would be employed on the economic variables in evaluating their performances based on the information collected.

1.5       DEFINITION OF CONCEPTS
Concepts and terms relating to evaluation of research study are:

• National income

This is the market value (total money value) of all final goods and services produced in an economy as well as the incomes generated by economic agents (buyers and sellers) over a period of time usually a year.

• Consumption

It is the sum of current expenditure on goods and services either by the private or government. Consumption is the ultimate objective of economic activities to create utility so as to satisfy human wants.
The private sector constitutes the largest component of national product. This is divided into three main categories
Namely; durable consumption expenditure includes expenditures on administrative and internal security, economic services, social and community services and transfer payments.

1.6       RESEARCH METHODOLOGY
The method of data collection employed in third study is purely secondary data collection.
All data were extracted from the CBN financial and economic review from 1992 – 2011 via the CBN website.

1.7       LIMITATION OF THE RESEARCH
Unlike the primary data where researcher knows the condition under which the data were collected and quite aware of any limitation they may contains, the reverse is the case in a secondary data. Users of secondary data cannot have through understanding of the background as the original investigator and so he is unaware of any limitation.
Though the data that would be presented by such a financial house as CBN could be said to be accurate. Such data items and information is usually cumbersome and climsy for easy analysis. Because their accuracy in estimation may be subjected to errors particularly the cross national income
The likely limitation may be when these data were collected and estimate from source. Which is still a primary business of the data.