The document provides an overview of national income concepts, defining national income, GDP, GNP, NNP, personal income, disposable income, and per capita income, along with their components and significance. It distinguishes between real and nominal national income, explaining the impact of inflation and taxation, and outlines three methods for measuring national income: production, income, and expenditure. These concepts are essential for economic analysis and policymaking, reflecting the overall economic performance and living standards within a country.

1. Concepts of National Income

2. Introduction
• - Definition of National Income
• - Importance in economic analysis and policymaking

3. Gross Domestic Product (GDP)
• Definition: The total value of all goods and services produced
within a country's borders. It includes the output of foreign-owned
businesses within the country but excludes the output of the
country’s businesses operating abroad.
• Components:
• - Consumption
• - Investment
• - Government Spending
• - Net Exports

4. Gross National Product (GNP)
• Definition: The total value of all goods and services produced by
the residents of a country, regardless of whether the production
takes place within the country or abroad.
• Difference from GDP: GNP includes the income earned by
nationals abroad but excludes the income earned by foreigners
within the country.
(OR)
• - Difference from GDP: Includes value produced by residents
abroad, excludes value produced by foreigners within the country

5. Net National Product (NNP)
• Definition: GNP minus depreciation (the value of wear and tear
on the country’s capital goods). NNP accounts for the loss of
value due to depreciation and provides a more accurate
measure of national income. (floods, terrorism, Dispute, Strick,
Sick industry)
• GNP minus depreciation
• - Significance: Accounts for the loss of value in the country's
assets

6. National Income (NI)
• Definition: Total income earned by residents and businesses, including
income from abroad, minus depreciation and indirect business taxes
• Components:
• - Compensation of Employees
• - Rental Income
• - Interest Income
• - Profits
• - Mixed Income

7. Personal Income (PI)
• Definition: Total income received by individuals and
households before personal taxes
• Components:
• Personal Income= National Income (NI) - corporate profits +
transfer payments

8. Disposable Personal Income (DPI)
• Definition: The amount of money that households have
available for spending and saving after paying taxes.
• Importance: Indicates the actual purchasing power of
individuals.
• It represents the income that is actually available for
households to spend on goods and services or save.

9. Per Capita Income
• Definition: National income divided by the population
• Significance: Measures average income and standard of living

10. Real vs. Nominal National Income
• Nominal National Income: Measured at current market prices
• Real National Income: Adjusted for inflation
• Importance: Reflects the true purchasing power over time

11. National Income at Factor Cost
• Definition: This measure adjusts GDP by adding subsidies and
subtracting indirect taxes.
• Importance: It represents the total income earned by factors
of production (labor, capital, land, and entrepreneurship)
within a nation.

12. Methods of Measuring National Income:
1.Production (or Output) Method:
1.Measures the total value of goods and services produced in an
economy.
2.Involves adding up the value added at each stage of production
across all industries.

13. Continue..
2. Income Method:
1.Measures the total income earned by factors of production, including
wages, rent, interest, and profits.
2.Sums up the incomes earned by individuals and businesses in the
production process.
3. Expenditure Method:
3.Measures the total spending on final goods and services in an economy.
4.Includes consumption by households, investments by businesses,
government spending, and net exports (exports minus imports).