NATIONAL INCOME AND RELATED AGGREGATES

NATIONAL INCOME AND RELATED AGGREGATES

• National income is the value of the aggregate output of the different sectors during a certain time period. 
• In other words, it is the flow of goods and services produced in an economy in a particular year.

• Gross Domestic Product at Market Price (GDPMP):

It refers to gross market value of all final goods and services produced within the domestic territory of a country during a period of one yea

• Gross Domestic Product at Factor Cost (GDPFC):

It refers to gross money value of all the final goods and services produced within the domestic territory of a country during a period of one year.

• Net Domestic Product at Market Price (NDPMP):

It refers to net market value of all the final goods and services produced within the domestic territory of a country during a period of one year.

• Net Domestic Product at Factor Cost (NDPFC):

It refers to net money value of all the final goods and services produced within the domestic territory of a country during a period of one year.

• Gross National Product at Market Price (GNPMP):

It refers to gross market value of all the final goods and services produced by the normal residents of a country during a period of one year.

• Gross National Product at Factor Cost (GNPFC):

It refers to gross money value of all the final goods and services produced by the normal residents of a country during a period of one year.

• Net National Product at Market Price (NNPMP):

It refers to net market value of all the final goods and services produced by the normal residents of a country during a period of one year.

• Net National Product at Factor Cost (NNPFC):

It refers to net money value of all the final goods and services produced by the normal residents of a country during a period of one year.

• Relationship between Four Domestic Concepts:

GDPMP, GDPFC, NDPMP and NDPFC are four Domestic concepts. The term ‘Domestic’ signifies that contribution of only those producers (whether resident or non-resident) is to be included who are within the domestic territory of the country.

Relationship between Four National Concepts:

GNPMP, GNPFC, NNPMP and NNPFC are four National concepts. The term National’ signifies that production of only normal residents of the country is to be included even if they are outside the domestic territory of the country.

IMPORTANT FORMULAE

 Estimation of National Income 

1) Estimation of GDPMP (Income method/ Expenditure method/Value added method) 

2) GNPMP = GDPMP + NFIA

3) NNPMP = GNPMP - Depreciation

4) NNPFC = NNPMP - Net indirect taxes

5) NFIA = Factor income from abroad - Factor income to abroad

6) Net Indirect Taxes = Indirect taxes - Subsidies

Estimation of GDPMP 

1. Income Method NDPFC = Compensation of employees + Operating surplus + Mixed income of self employed

2. Expenditure Method GDPMP = Private final consumption expenditure + Government final consumption expenditure +Gross domestic capital formation + Net exports.

 3. Value Added Method i) Value of output = Sales + Change in stock.

ii) GVAMP of GDPMP = Value of output - Intermediate consumption.