Page 34 - DECO402_Macro Economics

Unit-2: National Income : Concept of National Income

5. Net Domestic Product at Factor cost = NDP – Indirect tax + Subsidy or net domestic Notes
MP
(NDP ) income
FC
6. Gross Domestic Product at Factor Cost = NDP + Depreciation
FC
(GDP )
FC
7. Gross National Product at Factor Cost = GDP + Net factor Income from abroad
FC
(GNP )
FC
8. Net National Product or National Income = GNP – Depreciation
FC
at Factor Cost (NNP )
FC
9. Net National Disposable Income = Net domestic Income + Net factor income from
abroad + Net indirect tax + Net current transfers
from rest of the world
10. Gross National Disposable Income = Net national disposable income + current
replacement cost
11. Factor income from net domestic product = Net domestic product at factor cost – From
accruing to private sector departmental enterprises property and
entrepreneurship accruing income – saving of
non-departmental enterprises
12. Private Income = Income from domestic product accruing to
private sector + Net factor income accruing from
abroad + Current transfers from government +
Current transfer from rest of the world + Interest
on national loan
13. Personal Income = Private income – Corporate profit tax – Savings
of enterprises
14. Personal Disposable Income = Personal income – direct personal tax (or income
tax) – Miscellaneous fees and fines paid by
households

2.5 Summary

y A country’s national income relationship is only to normal residents of that country. Its means
that resides in India all foreigners and instituting earned factor income will be not considered,
a part of India’s national income, if those persons and institution is not the normal residents of
India. Repeating this fact, earned income by non-residents of India, rather a part of domestic
income of India, but it is not considered a part of national income of India.

2.6 Keywords

y Economic Interest – Interest related to wealth
y Obsolescence – Out of operation
y Expenditure Method – Process of expenses

2.7 Review Questions

1. What are the gross and net concept of national income?
2. What is meant for ‘Measurement of National Income’?

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