IMPORTANT TOPIC ON ECONOMICS Different Concepts of National Income
National income is an important concept of Macro Economics. There are number of concepts pertaining to national income.
1) Gross National Product (GNP)Gross national product is the total measure of the flow of goods and services, at market value resulting from current production, during a year in a country, including net income from abroad.GNP =C+I+G+(X-M)+(R-P)
2) Gross National Product at Market Price (GNP (MP))It means the gross value of final goods and services produced annually in a country, which is estimated according to the price prevailing in the market. Market price including cost of production + indirect taxes.GNP (MP) = C + I + G + (X-M) + (R-P)C = Private Consumption ExpenditureI = Domestic Private InvestmentG = Government's Consumption & Investment Expenditure.(X-M) = Net Export Value. (Value of exports Value of imports)(R-P) = Receipts from Property abroad - Payments to abroad.MP = Production at Market Price.
3) Gross National Product at Factor Cost: (GNP (FC))Gross national product at factor cost is the sum of the money value of the income, produced by and accruing to the various factors of production in one year in a country.In order to arrive at GNP at factor cost, we deduct indirect taxes from GNP at market prices and add subsidies to GNP at Market. Prices.GNP(FC) = GNP(MP) - Indirect Taxes + Subsidies
4) Gross Domestic Product at Market Price (GDP (MP))Gross domestic product at market price is the gross market value of all final goods and services produced within the domestic territory of a country, during a period of one year.• The term gross implies that it includes depreciation.• GDP at market price includes amount of indirect taxes paid and excludes amount of subsidy received, that is, net indirect taxes are included. GDP(MP) = GNP - Net Income from abroad.\GDP(MP) = C + I + G + (X-M)
5) Gross Domestic Product at Factor Cost (GDP (FC) )Gross domestic product at factor cost is the gross money value of all final goods and services produced within the domestic territory of a country, during a period of one year.GDP at factor cost includes amount of subsidy, but excludes amount of indirect taxes paid.GDP (FC) = GDP (MP) - Indirect Taxes + Subsidies\ GDP(FC)=C+I+G+(X-M)-IT+S
6) Net Domestic Product at Market Price (NDP (MP)):Net domestic product at market price is the net market value of all final goods and services produced, within the territorial boundaries of a country, during a period of one year.NDP (MP) = GDP (MP) - Depreciation
7) Net Domestic Product at Factor Cost (NDP (FC)):Net domestic product at factor cost is the net money value of all final goods and services produced, within the territorial boundaries of a country, during a period of one year.NDP (FC) is also known as domestic income or domestic factor income.NDP (FC) = GDP (MP) - Net Indirect Taxes - Depreciation
8) Net National Product at Market Price (NNP (MP)):Net national product at market price is the net market value of all final goods and services produced, by the residents of a country, during a period of one year. If we deduct depreciation from GNP at market prices we get NNP at market prices.NNP (MP) – GNP (MP) = Depreciation
9) Net National Product at Factor Cost (NNP (FC)):Net national product at factor cost is the net money, value of all final goods and services produced by the residents of a country, during a period of year.It includes income earned by factors of production.NNP (FC) - NNP (MP) - Indirect Taxes + Subsidies
10) National Income at Factor Cost (NI (FC)): National income at factor cost means the sum of all incomes, earned by resource suppliers for their contribution of land, labour, capital and entrepreneurial ability, which go into the year's net production.NI (FC) = NNP (MP) - Indirect Taxes + Subsidies.
Personal Income (PI):Personal income is the sum of all incomes, actually received by all individuals or households from all the sources during a given year. It may be earned or unearned.
Personal Disposable Income:Personal disposable income is that part of personal income which is left behind after payment of personal direct taxes like income tax, personal property taxes, etc.
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