NATONAL NCOME

,9 is N,9ion, ncome
N,9ion, income refers 9o 9e v,:e of , goods ,nd
services prod:ced in ,n economy d:ring , given
period of 9ime. i.e., ye,r.
N,9ion, ncome = N,9ion, o:9p:9 = N,9ion,
Expendi9:re
3 Me,s:res of N,9ion, ncome-
1. Te s:m of v,:es of , fin, goods & services
prod:ced
2. Te s:m of , incomes, in c,s ,nd kind, ,ccr:ing 9o
f,c9ors of prod:c9ion in , ye,r.
3. Te s:m of cons:mers expendi9:re, ne9 inves9men9
expendi9:re & gov9. expendi9:re on goods & services.
Circ:,r fow of N,9ion, ncome
Concep9s
Gross NationaI Product GNPmp: To9, m,rke9 v,:e
of , goods & services prod:ced in , ye,r.
Gross Domestic Product GDPmp:
GDPmp = GNPmp - Ne9 f,c9or income from ,-ro,d.
Ne9 f,c9or income- Difference -e9ween f,c9or income
received from ,-ro,d -y norm, residen9s of ndi, for
rendering f,c9or services in o9er co:n9ries ,nd f,c9or
incomes p,id foreign residen9s for f,c9or services
rendered -y 9em in domes9ic 9erri9ory of ndi,.
Net NationaI Product mp: NNPmp
NNPmp = GNP Depreci,9ion
Net nationaI Product fc: NNPfc
NNPfc= NNPmp ndirec9 9,xes + s:-sidies
= NNPmp Ne9 ndirec9 9,xes
DisposabIe Income= Person, income- Person, 9,xes
= Cons:mp9ion + S,vings
Concep9s of N,9ion, ncome
Ne9 Domes9ic Prod:c9 ,9 f,c9or cos9-
NDPfc= ,ges + n9eres9 + Ren9 + Profi9 + Mixed income
Ne9 Domes9ic Prod:c9 ,9 m,rke9 prices-
NDPmp= NDPfc + NT- S
Ne9 N,9ion, Prod:c9 ,9 M,rke9 Prices-
NNPmp= NDPmp +NF
Gross N,9ion, Prod:c9 ,9 M,rke9 Prices-
GNPmp= NNPmp + D
Gross Domes9ic Prod:c9 ,9 M,rke9 Prices-
GDPmp= GNPmp - NF
Gross N,9ion, Prod:c9 ,9 f,c9or cos9-
GNPfc = GNPmp NT + S
Gross Domes9ic Prod:c9 ,9 F,c9or Cos9s-
GDPfc= GNPfc - NF
Ne9 n,9ion, Prod:c9 ,9 F,c9or Cos9-
NNPfc= GNPfc - D
Re, ,nd Nomin, GDP
Nomin, - Te v,:e of N ,9 c:rren9 m,rke9
Prices
Re, - Nomin, GDP correc9ed for inf,9ion
Nomin, GDP / GDP def,9or
GDP def,9or is 9e price index 9,9 me,s:res
9e ,ver,ge price of componen9s of GDP re,9ive
9o 9e -,se ye,r.
Re, GDP is more ,ppropri,9e me,s:re of
economic we-eing wic is 9e v,:e of goods
& services me,s:red :sing , cons9,n9 se9 of
prices.
Me9ods of Mes:remen9
O:9p:9/Prod:c9/V,:e Added
Me9od
ncome Me9od
Expendi9:re Me9od
utput/VaIue Added method
Do:-e or M:9ipe co:n9ing 9o -e ,voided
Ony fin, goods 9o -e co:n9ed or 9o co:n9
ony 9e v,:e ,dded ,9 e,c s9ep d:ring
every process of prod:c9ion.
To find o:9 9e con9ri-:9ion of e,c sec9or
of economy sep,r,9ey second me9od is
s:i9,-e.
Economy is divided in9o v,rio:s sec9ors
en 9e v,:e ,dded in , 9e processes
of prod:cing , 9e commodi9ies in ,n
economy, we ge9 9e n,9ion, prod:c9.
Ex,mpe
$tage of production $aIe
Price
Cost of
intermediate
product
VaIue
Added
oo prod:cing firm 50 00 50
Spinning firm 120 50 70
e,ving Mi 260 120 140
G,rmen9 M,king firm 350 260 90
oes,er 380 350 30
Re9,ier 450 380 70
The price for consumer 450
ncome Me9od
Tis me9od is -,sed on 9e income received -y
9e owners of f,c9ors of prod:c9ion.
Ren9
,ges- L,-o:rers in prim,ry, second,ry ,nd
9er9i,ry sec9ors
n9eres9s
Profi9s
Mixed income- ncome from services, Sef-
occ:p,9ion, Unorg,nised sec9ors
Ren9 + ,ges+ n9eres9 + Profi9s + Mixed
ncome-----NDP at fc
+ Depreci,9ion----GDP at fc
+ Ne9 foreign ncome---GNP at fc
+ Ne9 indirec9 9,xes--- GNP at mp
penditure Method
GNP -y ,dding :p 9e expendi9:re on fin,
goods ,nd services in , co:n9ry d:ring , given
ye,r.
Priv,9e fin, cons:mp9ion expendi9:re
Governmen9 cons:mp9ion expendi9:re
Ne9 c,pi9, form,9ion
Expor9s
mpor9s
GNP ,9 mp= C+ + G+ (X-M)+ (R-P)
GDP ,9 mp = C + + G + (X-M)
Diffic:9ies in Me,s:remen9 of
N,9ion, ncome
Non-m,rke9 prod:c9ion- Ho:seod work
-y o:sewife
mp:9ed V,:es Sef s:ppied goods
Economic B,ds-ex9ern,i9y- no9 ded:c9ed
from n,9ion, income
Do:-e co:n9ing
B,ck money