NATIONAL INCOME

Gross Domestic Product (GDP)

value of all final goods and services produced within the boundary of a nation during a year period
financial year of india is from 1st April to 31st March

Net Domestic Product (NDP)

GDP calculated after adjusting the weight of the value of depreciation
NDP = GDP – Depreciation

Gross National Product (GNP)

GNP = GDP + Income from Abroad
In India’s case, it has always been negative
GNP = GDP + (–Income from Abroad)

Net National Product (NNP)

This is the purest form of the income of a nation
NNP = GNP – Depreciation

NNP at factor cost

NNP at factor cost = NNP at Market prices – Indirect taxes + Subsidies

Personal Income

Total income received by the individuals of a country from all sources before payment of direct taxes in a year

Disposable Income

individual’s income after the payment of income tax
Disposable Income = Personal income – Direct Tax

Real Income

Real income is the income of individuals or nations after adjusting for inflation

GDP Deflator

Price changes of goods and services
Inflation
GDP deflator = Nominal GDP/ Real GDP x 100

Gross Value Added

Measure of the value of goods and services produced in an area, industry or sector of an economy
GVA = GDP + subsidies - (direct, sales) taxes

Factor cost

Total cost of a production
Excludes Taxes and Subsidies

Market cost

product or service is sold in the open market

India National Income

Till Jan 2015 - Used Factor cost
After Jan 2015 - Using market Cost

Current prices

constant prices + inflation

Purchasing Power Parity

Estimates the amount that needs to be adjusted to the price of an item
Compare countries income levels
To know Cost of living, or possible rates of inflation and deflation

National Income Calculating Methods

Product method
Expenditure method
Income method

Product method

Income is measured on the basis of the flow of goods and service during a year

Expenditure method

Income is measured as a flow of expenditure

Income method

Income is measured as a flow of income factor

Factors Of Production

Labor (gets wages/salary)
Capital (receives interests)
Land (receives rent)
Entrepreneurship (gets profit as remuneration