National Income Flashcards
Expand the following
GDP
GNP
NNP
NDP
Gross Domestic Product
Gross national products
Net National Product
Net domestic product
What is GDP
What are we include in the calculation of GDP
The monetary value of all final goods and services produced in an economic system during a given time period is called Gross Domestic Product
Final goods and services are included in the calculation of GDP
What is the formula to calculate GDP
Y = C+ I + G + (X - M)
Y = GDP
C = Consumption
G = Government spending.
X = exports
I = import
What is Nominal GDP and Real GDP
In Nominal GDP, the value of goods and services are calculated on the basis of current year price
In Real GDP, the value of goods and services is calculated on the basis of base year prices
Real GDP is a more effective way of calculating GDP of countries
What is GNP
Gross national product is referred to as the total value of all the goods and services produced by residents and businesses of India irrespective of location of production
How to calculate GNP
GNP = GDP + Factor income earned by domestic factors of production employed in the rest of the world - Factors income earned by the factors of production of rest of the world employed in the domestic economy
GNP = GDP + net factor income from abroad
What is NNP
NNP stands for Net National Product
NNP is the market value of all the finished goods and services that are produced by citizens of a nation, living domestically and internationally during the year.
NNP = GNP - DEPRECIATION
What is NDP (net domestic product)
Net domestic product is obtained by deducting the amount of depreciation from GDP
NDP = GDP - depreciation
What is per capita income
How to calculate per capita income
Per capita income is a measure of the amount of money and by per person in a nation or geographic area.
Per capita income of a nation is calculated by dividing the countries national income by its population
What is personal income and disposable income
What are the sources of personal income
Personal income is the amount of money collectively received by inhabitants of a country
The source of personal income includes money earned from employment, dividends, distribution paid by investment, rent derived from property ownership and profit sharing from business.
Disposable income is personal income - Taxes ( i.e. money in hand to spend)
Measurements of national income
There are three methods to calculate national income
1. Income method
2. Product / value added method
3. Expenditure method
What is the income method to calculate national income
Net national income = compensation of employees operating surplus mixed (wages and salary + rental income + profit + mixed income) + net income + net factor income from abroad
What is the product / value added method to calculate national income
National income = GNP - cost of capital - depreciation - indirect taxes
What is expenditure method to calculate national income
GDP at market price = private sectors expenditure on final consumer goods + government expenditure on final consumer goods + investment or capital formation + net import export
