This document defines key concepts in national income accounting including: - National income is measured at current prices and constant prices, and at factor cost and market prices. - Gross national product (GNP) and gross domestic product (GDP) measure the total value of final goods and services produced domestically and abroad. - Other concepts covered include the GNP deflator, net national product (NNP), green GNP, per capita income, private income, personal income, and personal disposable income.

1. Main Concepts of National
Income Accounting
• National Income at current prices and constant prices
• National Income at factor cost and market prices
• Gross National Product(GNP)
• GNP Deflator
• Net National Product(NNP)
• Gross Domestic Product(GDP)
• Green GNP
• Per Capita Income
• Private Income
• Personal Income
• Personal Disposable Income

2. National Income at current
prices
• National income at current or nominal
year prices refers to measure the value
of an economy’s activities on the basis
of the price which is ongoing time.

3. • National income at constant or base
year prices refers to measuring of
national income on the basis of a base
year price.
• Compared to measuring national income
at current year prices , base year is
better.
National Income at constant
prices

4. • We can derive National income at factor
cost by adding the cost occurred during
the production time on different
factors of production like land, labour,
capital etc.
• Formula to find National income at
factor cost:
National income at factor cost =
National income at Market prices – Net
indirect taxes + subsidies.
National Income at factor
cost

5. • We can measure national income at
market prices by multiplying the
quantity of output with the market
prices of that output.
• The Net Factor Income from abroad is
also included in National income when
measuring at market prices.
National Income at market
prices

6. • Gross National Product (GNP) is the market
value of all final goods and services produced
by a country during a one year period.
• GNP includes the value of output produced in
abroad.
GNP can be derived by using following
formula:
GNP = GDP + Net Factor Income from abroad.
Gross National Product(GNP)

7. • GNP Deflator is a important concept in
macro economics to measure the general
price level in an economy.
• GNP Deflator is the ratio of nominal
GNP and real GNP.
GNP Deflator = Nominal GNP/Real GNP
GNP Deflator

8. • NNP is the total value of all the final
goods and services by a country during a
specified period excluding depreciation.
• Mathematically,
NNP = GNP - Depreciation
Net National Product(NNP)

9. • GDP is the total money value of all final
goods and services within the domestic
territory of a country.
• The contribution of foreigners to the
production or output also included in
GDP.
Gross Domestic Product(GDP)

10. • NDP is the total money value of all the
final goods and services produced within
the domestic territory of a country
during a specified period excluding the
amount of depreciation.
• NDP = GDP - Depreciation
Net Domestic Product(NDP)

11. • Green GNP is one the new concept in
Macro Economics related to the concept
of national income accounting.
• Green GNP can be used by reducing
losses like environmental pollution,
natural calamities etc. that reduce the
actual value of final output from GNP.
Green GNP

12. • Per Capita Income is the average income of
people of a country in a particular period.
• It can be calculated by dividing the national
income of the country by total population.
• Mathematically,
Per Capita Income =
National income/population
Per Capita Income

13. • Private Income refers to the income
earned by individuals and other private
corporates from their economic and
non-economic activities irrespective of
domestic territory or foreign territory.
Private Income

14. • Personal Income is the income received by
individuals of a country from all the
sources.
• It can be calculated using the following
formula:
Personal Income = Private Income –
Undistributed profits – profit taxes
Personal Income

15. • Personal Disposable Income is the
amount of income of individuals which
can be spend for consumption and
savings.
• Individuals can spend their income only
after the payment of direct taxes.
Personal Disposable Income = Personal
Income – Direct taxes
Personal Disposable Income