Page 28 - DECO402_Macro Economics

Unit-2: National Income : Concept of National Income

(B) The Expenditure on change in Stock or Inventories: Calculating of expenditure on physical Notes
change in stock, quantity of physical change is multiplied with market value, we add in gross national
product that goods and service production value which is production in on financial year, but does
not sell.
3. Net Exports Finally calculated the value of net export (export-import) from abroad. The
difference in value of export and import is called net export. Production of exports in done be
factors of production of any country. Sells of exporting goods have no effects on the income
of domestic factor of production. Due to this reason export values is considered a part of
national income. The expenditure on imports on is deducted from national income, because
this expenditure is not done on domestic produced goods.

Gross Domestic Product at Market Price = Final private consumption expenditure + Final government
consumption expenditure + Gross domestic capital formation (Gross domestic permanent capital
formation + change in stock) + Net export (Export – Import)

At factor cost to find out the national production or national income at market cost from domestic
product, net indirect tax and depreciation is deducted and from abroad net factor income is added.

Did You Know? That production for self-consumption is also a part of private consumption
expenditure.

Self Assessment
Multiple Choice Questions:
4. National income can be created
(a) in any part of world (b) only in own country
(c) only in abroad (d) none of these
5. If on Indian resides in abroad for more than one year then he will be considered
(a) foreigner (b) non-resident indian
(c) domestic residents (d) none of these
6. In ‘Normal Resident term, both person and rites are included.
(a) pioneer (b) included
(c) separate (d) none of these

2.3 Some Related Aggregates

We have studied already in chapter2, about domestic product and national income. We have known
domestic product’s gross and net concepts also. Besides this, at market cost and at factor cost / basic
price, domestic product and national income’s concepts have been described in short. In this chapter
we will repeated measurement of concepts and other related aggregates.

(i) Gross Domestic Product at Market Price (GDP )
MP
Using value addition method, it can be measured by following type:

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