Tuesday, 25 February 2020

Basic National Income Concepts

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Basic National Income Concepts


National income is the aggregate of money value of the annual flow of final goods and
services in the national economy during a given period.
GNP is the value of all final goods and services produced by domestically owned factors
of production within a given period. The production units, which produce goods and
Notes services, distribute money incomes to all who help in production in the form of wages,
rent, interest and profit, is known as Gross National Income.
National produce differs from domestic product by the amount of net factor income from
abroad.
The valuation of the national product at market prices indicates the total amount actually
paid by the final buyers while the valuation of national product at factor cost is a measure
of the total amount earned by the factors of production.
Personal income is calculated by subtracting from national income those types of incomes
which are earned but not received and adding those types which are received but not
currently earned.


Disposable income: The amount of income left to an individual after taxes have been paid,
available for spending and saving.
Gross domestic product: The money value of all final goods and a service produced by normal
residents as well as non-residents in the domestic territory of a country but does not include net
factor income earned from abroad.
Gross national product: Total market value of all finished goods & services produced in a year
by a country's residents
National income: National income is a measure of the total value of the goods and services
(output) produced by an economy over a period of time (normally a year).
Nominal GDP: It is calculated by using the current prices to place value on the economy's
production of goods and services.
Personal income: Income received by persons from all sources. It includes income received from
participation in production as well as from government and business transfer payments
Real GDP: It is calculated by evaluating current production using prices that are fixed at past
levels, it shows the economy's overall production which changes over time.

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