national income and its concepts

1. NATIONAL INCOME :
Submitted by :
JAGJEET KUMAR
11308653

2. CONTENT
• MEANING OF NATIONAL INCOME
• EXAMPLE OF NATIONAL INCOME
• CONCEPTS OF NATIONAL INCOME
-GROSS DOMESTIC PRODUCT
-GROSS NATIONAL PRODUCT
-NET DOMESTIC PRODUCT
-NET NATIONAL PRODUCT
-PERSONAL INCOME
-DISPOSABLE INCOME

3. MEANING OF NATIONAL INCOME
• NATIONAL INCOME IS THE MONEY VALUE OF ALL THE FINAL
GOODS AND SERVICES PRODUCED BY A COUNTRY DURING
A PERIOD OF ONE YEAR. NATIONAL INCOME CONSISTS OF A
COLLECTION OF DIFFERENT TYPES OF GOODS AND
SERVICES OF DIFFERENT TYPES.
• SINCE THESE GOODS ARE MEASURED IN DIFFERENT
PHYSICAL UNITS IT IS NOT POSSIBLE TO ADD THEM
TOGETHER. THUS WE CANNOT STATE
NATIONAL INCOME IS SO MANY
MILLIONS OF METERS OF CLOTH.
THEREFORE, THERE IS NO WAY EXCEPT
TO REDUCE THEM TO A COMMON
MEASURE.
• THIS COMMON MEASURE IS MONEY.
SOURCE: http://www.icaiknowledgegateway.org/littledms/folder1/chapter-5-part-2.pdf

4. EXAMPLE OF NATIONAL INCOME
IF THE VALUE OF A METER OF CLOTH IS Rs.20
AND THE TOTAL CLOTH PRODUCED IS 100
METERS, THEN THE MONEY VALUE OF CLOTH IS
Rs.2000. IN THIS WAY WE CAN FIND OUT THE
VALUE OF OTHER GOODS AND SERVICES AND
THE TOTAL VALUE OF ALL THE GOODS AND
SERVICES PRODUCED DURING ONE YEAR.
SOURCE: http://www.icaiknowledgegateway.org/littledms/folder1/chapter-5-part-2.pdf

5. CONCEPTS OF NATIONAL INCOME
• GROSS DOMESTIC PRODUCT
• GROSS NATIONAL PRODUCT
• NET DOMESTIC PRODUCT
• NET NATIONAL PRODUCT
• PERSONAL INCOME
• DISPOSABLE INCOME

6. GROSS DOMESTIC PRODUCT
GROSS DOMESTIC PRODUCT (GDP) IS THE
MONETARY VALUE OF ALL THE FINISHED GOODS
AND SERVICES PRODUCED WITHIN A COUNTRY’S
BORDERS IN A SPECIFIC TIME
PERIOD. THOUGH GDP IS
USUALLY CALCULATED ON
AN ANNUAL BASIS, IT CAN
BE CALCULATED ON A
QUARTERLY BASIS AS WELL.
SOURCE: www.investopedia.com/terms/g/gdp.asp

7. GROSS DOMESTIC CAN BE CALCULATED USING THE
FORMULA :
GDP=C+G+I+NX
WHERE
‘C’ IS EQUAL TO ALL PRIVATE CONSUMPTION
‘G’ IS THE SUM OF GOVERNMENT SPENDING
‘I’ IS THE SUM OF ALL THE COUNTRY’S
INVESTMENT, INCLUDING BUSINESSES CAPITAL
EXPENDITURE
‘NX’ IS THE NATION’S TOTAL NET EXPORT,
CALCULATED AS TOTAL EXPORTS MINUS TOTAL IMPORTS
(NX=EXPORTS-IMPORTS).
GROSS DOMESTIC PRODUCT
SOURCE: www.investopedia.com/terms/g/gdp.asp

8. GROSS NATIONAL PRODUCT
AN ESTIMATED VALUE OF THE TOTAL WORTH OF
PRODUCTON AND SERVICES, BY CITIZENS OF A
COUNTRY, ON ITS LAND OR ON FOREIGN LAND,
CALCULATED OVER THE COURSE ON ONE YEAR.
GNP CAN BE CALCULATED USING THE FORMULA:
GNP=GDP+NR-NP
WHERE, GDP IS GROSS DOMESTIC PRODUCTION
NR IS NET INCOME INFLOW FROM ABROAD
NP IS NET PAYMENT OUTFLOW TO FOREIGN
ASSETS
SOURCE: http://www.diffen.com/difference/GDP_vs_GNP

9. NET DOMESTIC PRODUCT
NET DOMESTIC PRODUCT (NDP) REPRESENTS
THE NET BOOK VALUE OF ALL GOODS AND
SERVICES PRODUCED WITHIN A NATION’S
GEOGRAPHIC BORDERS OVER A SPECIFIED
PERIOD OF TIME.
SOURCE: http://www.investinganswers.com/financial-dictionary/economics/net-domestic-product-ndp-2422

10. NET DOMESTIC PRODUCT
NDP CAN BE CALCULATED USING THE FORMULA:
NDP=GROSS DOMESTIC PRODUCT(GDP)-
DEPRECIATION
DEPRECIATION IS A TERM USED FOR TAX AND
ACCOUNTING PURPOSES THAT DESCRIBES THE
METHOD A COMPANY USES TO ACCOUNT FOR THE
DECLINING VALUE OF ITS ASSETS.
NDP= CONSUMPTION+GOVERNMENT
EXPENDITURES+INVESTMENT+EXPORTS-IMPORTS-
DEPRECIATION
SOURCE: http://www.investinganswers.com/financial-dictionary/economics/net-domestic-product-ndp-2422

11. NET NATIONAL PRODUCT
THE SUM OF INCOME TAKEN FROM ALL SECTORS,
INCLUDING PERSONAL, BUSINESS AND
GOVERNMENT CALLED NET NATIONAL INCOME
(NNP)
NNP CAN BE CALCULATED USING THE FORMULA:
NNP=C+I+G+NX+NFF-IT-D
WHERE: C = CONSUMPTION, I IS INVESTMENTS, G =
GOVERNMENT SPENDING, NX= NET EXPORTS(CALCULATED
BY SUBTRACTING IMPORT FROM EXPORTS) , NFF = NET
FOREIGN FACTOR INCOME, IT = INDIRICT TAXES, AND D =
DEPRECIATION
SOURCE: http://www.businessdictionary.com/definition/net-national-income.html

12. PERSONAL INCOME
PERSONAL INCOME IS REFERS TO AN INDIVIDUAL’S TOTAL
EARNINGS FROM WAGES, INVESTMENT ENTERPRISES,AND
OTHER VENTURES. IT IS THE SUM OF ALL THE INCOMES
ACTUALLY RECEIVED BY ALL THE INDIVIDUALS OR HOUSEHOLD
DURING A GIVEN PERIOD.
PERSONAL INCOME=NATIONAL INCOME-CONTRIBUTION FOR
SOCIAL INSURANCE-CORPORATE RETAINED EARNINGS+NON
BUSINESS INTEREST+TRANSFER PAYMENTS FROM
GOVERNMENT AND BUSINESS
SOURCE: http://www.investinganswers.com/financial-dictionary/personal-finance/personal-income-2305

13. DISPOSABLE INCOME
DISPOSABLE INCOME WHEN PERSONAL DIRECT
TAXES ARE SUBRACTED FROM PERSONAL
INCOME, THE OBTAINED VALUE IS CALLED
DISPOSABLE INCOME.
DP CAN BE CALCULATED USING THE FORMULA:
DISPOSABLE INCOME=PERSONAL INCOME-
DIRECT TAXES
SOURCE: https://subjectmaterial.wordpress.com/2011/07/06/concepts-of-national-income/

14. Any Question ?????

15. Thank you …..