National Income Flashcards
National Income basic definition
Total income generated by all the residents of a country in its economic territory in a particular period of time
What are the basic methods of measuring national income?
- Income Method
- Production Method
- Expenditure Method
Define Income Method
National Income is calculated by compiling income of household
Define Production Method
National Income calculated by compiling the total value of all goods and services
Define Expenditure Method
National Income is calculated by compiling total expenditure incurred by the people
Production Method is also called
Product Method, Output Method or Value Added Method
Expenditure Method is also called
Consumption Method
The new series of National Income in India was introduced in
2015
National Income calculation in India is guided by
System of National Accounts, 2008
Basic Price also called
Producer’s price = production cost
GVA full form
Gross Value Added
Production Tax:
The tax imposed irrespective of production and are independent of volume of production. eg: Registration fees, stamp duty, etc.
Gross Value Added at Basic Price =
Compensation of Employees (CE) + Operating Surplus(OS) or Mixed Income (MI) + Consumption of Fixed Capital (CFC) + Production taxes - Production subsidies
GVA at bp = CE + OS/MI + CFC + (Production tax - production subsidies)
Whats is Operating Surplus / Mixed Income?
Surplus accruing from process of production (profit).
In case of incorporated entities, surplus is called OS.
For unincorporated entities, it is called Mixed Income.
GVA at Factor Cost =
GVA at basic prices - (Production taxes - Production subsidies)
GVA @fc = CE + MI/OS + CFC
