NATIONAL INCOME


What is National Income ?

 Total value of final goods and services  produced in a country is called National Income. 
 National Income is being used as a measure of development througout the world. But there are various concepts relating to national income. 

Concepts of National Income :

Gross Domestic Product : Total value of final goods and services produced within the country during a year is GDP. 


GDP = Price of the goods and services X Quantity of goods and services (p*Q)

GDP has four components 

GDP= C+I+G + (X-M) 

C= consumption

I = Investment

G = Government expenditure

(X-M) = Export minus import 

 Gross National Product : Total value of final goods and services produced by the residents of a  country within in domestic territory as well as abroad is GNP. 


GNP = GDP + NFIA
NFIA = Net factor income from aboard.

Depriciation : Capital assets wear out in the course of their use year  by year, this is called depriciation. 

Net Domestic Product : This is deducting depreciation from GDP . 
 
 NDP = GDP- Depriciation

Net National Product at Market Prices : It is market value of net output of final goods and services produced by an economy during a year and net factor income from abroad.

NNP = GNP - IT- Depriciation

NNP at M.P = C+ I + G + (X-M) +NFIA - IT - Depreciation 
 
IT= Indirect Taxes, MP = Market Price

National Income at Factor Cost : It NNP  + Subsidies - Indirect Taxes . Here National Income at Factor cost  is total income earned by resourdes for their contributin of land, capital and organizational ability.
 

Personal Income : It is the total inocme recieved by individual and households of a country during one year. 
 
Personal Income = National Inocme - Corporate Income Taxes - Undistributed profits - social security contributtion + Transfer Payments( they include scholarships, unemployment, unemployment dole,oldage pensions etc )

Disposable Income : It is the income left with the individuals after the payment of direct taxes from personal income. 
Disposable Income = Personal Income - Direct Taxes.

Per Captia Income : It is calculated by dividing national income of the country by the total population of a country.

PCI= Total national Income / Total Population