- Total value of all goods and services produced within the Boundary of a country (Including foreigner's Production within the country).
- Usually goods once produced under goes wear and tear and hence depreciation occurs.
- When calculating the Net Value the depreciation value will be deducted.
NDP (Net Domestic Product)
- NDP is value of GDP after the Depreciation reduction.
NDP = GDP - DepreciationNet Factor Income: Difference between the Exports and Imports
GNP (Gross National Product)
GNP = GDP + Net factor Income
NNP (Net National Product)
- NNP is value of GNP after the Depreciation reduction.
NNP = GNP - DepreciationThe above mentioned measures can be calculated at factor cost and market cost.
Factor Cost: It is the production cost, it includes subsidies and excludes indirect taxes.
Market Cost: It is the market price of a product, it excludes subsidies and includes indirect taxes.
- NNP at factor cost is said to be National Income.
National Income = NNP at factor cost
Personal Income and Disposable Personal Income
- Personal Income includes sum of all the incomes received by a person.
- Disposable income is the amount available which can be spent at his will.
Disposable Income = Personal Income - Direct Taxes
Per Capita Income
- Amount of Money earned per person.
- It can be calculated as follows
Per Capita Income = National Income / Population
Methods of Computing National Income
- Product Method
- Income Method
- Expenditure Method