It shortly tells about the national income

2. National income:
Nation income is the measure of the total value
of the goods and service(output) produced by an
economy over a period of time (normally a year).
It is measure of the sum total of all the spending
involved for the production of output.

3. Concepts of nation income:
 Gross domestic product
 Gross nation product
 Net national product
 Net national at factor cost or nation income
 Personal income
 Disposable income
 Per capital income

4. Gross domestic product:
“GDS” is the total market value of all final
goods and service currently produced with in the
domestic territory of the country in a year.
There are difference sector available:
 primary sector -agricultural
 secondary sector -electricity
 tertiary sector -transfer

5. Gross national product:
“GNP” is the total market value of all goods and
service which includes net foreign income earning .i.e)
“GDP”+ Net foreign earning.
[GNP=C + Ig + G +(X-M)]
C=consumption expenditure G=Government
purchases goods and service Ig=investment X=export
M= import

6. Net national product:
“Net national product” is the market value of all final
goods and service after undergoing depreciation.
[“ NNP=GNP-Depreciation”]
Depreciation: consumption of fixed capital or fall
in the value of fixed capital or due to wear and tear

7. Net national product at factor cost:
“NNP” at factor cost is the sum of wages rent interest
profit paid to factor for their contribution to the
production of goods and service in a year.
[“NNP ” at factor cost: NNP at market price – Indirect
taxes + subsidies]

8. Personal income:
“Personal income” is the sum of incomes actually
received by all the individuals household during a
given year.
[personal income= national income- social security
contribution- corporate income taxes-
transfer payments]

9. Disposable income:
Disposable income is the spent by individual on
consumption and rest is saved.
[Disposable income= personal income –
personal taxes]

10. Per capital income:
“Per capital income” is the rough index of the
standard of living of the people in a country.
[Per capital income= National income/
Population]

11. Difference method of accounting
national income
 Income method
 Product method
 Expenditure method

12. INCOME METHOD:
 This method approaches nation income from the
distribution side.
 Sum of all incomes both in cash and kind is derived
from proving payment to all actors of production in a
given time period.
IM=R+W+I+P
IM=income method R=rent I=interest P=profit

13. PRODUCT METHOD
 This method approaches national income from the
output side.
 Sum of values of all the output(goods and services) is
arising in several of the nation production during a
given year.

14. EXPENDITURE INCOME:
It is the sum of consumers expenditure
government expenditure of goods and services and net
expenditure on capital goods.
Income can be spent either on consumer goods or
investment goods

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