National income aggregates

National Income Aggregates
National Income
National income means the value of goods and services produced by a country
during a financial year. Thus, it is the net result of all economic activities of any country
during a period of one year and is valued in terms of money. National income is an
uncertain term and is often used interchangeably with the national dividend, national
output, and national expenditure.
Gross Domestic Product (GDP)
Gross domestic product (GDP) is the total monetary or market value of all the finished
goods and services produced within a country's borders in a specific time period.
GDP Deflator
The GDP price deflator, also known as the GDP deflator or the implicit price deflator,
measures the changes in prices for all of the goods and services produced in an
economy.
 The GDP price deflator measures the changes in prices for all of the goods and
services produced in an economy.
 Using the GDP price deflator helps economists compare the levels of real
economic activity from one year to another.
 The GDP price deflator is a more comprehensive inflation measure than the CPI
index because it isn't based on a fixed basket of goods.
Gross domestic product (GDP) represents the total output of goods and services.
However, as GDP rises and falls, the metric doesn't factor the impact of inflation or
rising prices into its results. The GDP price deflator addresses this by showing the
effect of price changes on GDP, first by establishing a base year and, secondly, by
comparing current prices to prices in the base year.
The GDP price deflator shows how much a change in GDP relies on changes in the price
level. It expresses the extent of price level changes, or inflation, within the economy by
tracking the prices paid by businesses, the government, and consumers.
Gross Domestic Product at Market Price (GDPMP):
It refers to gross market value of all final goods and services produced within the
domestic territory of a country during a period of one year.
1.’Gross’ in GDPMP signifies that no provision has been made for depreciation, i.e. it
includes depreciation.
Domestic’ in GDPMP signifies that it includes goods and services produced by all units
located within the domestic territory (irrespective of fact whether produced by residents
or non-residents).
3. ‘Market Price’ in GDPMF signifies that it includes amount of indirect taxes paid and
excludes amount of subsidy received, i.e. it shows that net indirect taxes (NIT) have
been included.
4.’Product’ in GDPMP signifies that only final goods and services have to be included.
By making adjustments in GDPMP, we can derive other aggregates.
Gross Domestic Product at Factor Cost (GDPFC):
It refers to gross money value of all the final goods and services produced within the
GDPFC = GDPMP – Net Indirect Taxes
(Net indirect tax= Indirect taxes – subsidies)
Net Domestic Product at Market Price (NDPMP):

It refers to net market value of all the final goods and services produced within the
NDPMP = GDPMP – Depreciation
Net Domestic Product at Factor Cost (NDPFC):
It refers to net money value of all the final goods and services produced within the
NDPFC = GDPMP – Net Indirect Taxes – Depreciation
NDPFC is also known as Domestic Income or Domestic factor income.
Relationship between Four Domestic Concepts:
GDPMP, GDPFC, NDPMP and NDPFC are four Domestic concepts. The term ‘Domestic’
signifies that contribution of only those producers (whether resident or non-resident) is
to be included who are within the domestic territory of the country.
Gross National Product (GNP)
Gross national product (GNP) is an estimate of total value of all the final products and
services turned out in a given period by the means of production owned by a country's
residents. GNP is commonly calculated by taking the sum of personal consumption
expenditures, private domestic investment, government expenditure, net exports and
any income earned by residents from overseas investments, minus income earned
within the domestic economy by foreign residents. Net exports represent the difference
between what a country exports minus any imports of goods and services.
Net factor income from abroad (Nfia)

Net factor income from abroad is factor income received from abroad minus factor
incomes paid abroad. Equation: Net factor income from abroad= Factor income earned
by our residents from the rest of the world - Factor income earned by non- residents in
our domestic territory.
GNP Deflator
The gross national product deflator is an economic metric that accounts for the effects
of inflation in the current year's gross national product by converting its output to a level
relative to a base period.
Gross National Product at Market Price (GNPMP):
It refers to gross market value of all the final goods and services produced by the
normal residents of a country during a period of one year.
GNPMP = GDPMP + Net factor income from abroad
It must be noted that GNPMP can be less than GDPMP when NFIA is negative. However,
GNPMP will be more than GDPMP when NFIA is positive.
Gross National Product at Factor Cost (GNPFC):
It refers to gross money value of all the final goods and services produced by the
normal residents of a country during a period of one year.
GNPFC = GNPMP – Net Indirect Taxes
Net National Product at Market Price (NNPMP):
It refers to net market value of all the final goods and services produced by the normal
residents of a country during a period of one year. NNPMP = GNPMP – Depreciation
Net National Product at Factor Cost (NNPFC):

It refers to net money value of all the final goods and services produced by the normal
residents of a country during a period of one year.
NNPFC = GNPMP – Net Indirect Taxes – Depreciation
It must be noted that NNPFC is also known as National Income.
Relationship between Four National Concepts:
GNPMP, GNPFC, NNPMP and NNPFC are four National concepts. The term National’
signifies that production of only normal residents of the country is to be included even if
they are outside the domestic territory of the country.

National income aggregates

Uploaded by

Copyright:

Available Formats

National income aggregates

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

National income aggregates

Uploaded by

Copyright:

Available Formats

National Income Aggregates

Gross Domestic Product (GDP)

Gross Domestic Product at Market Price (GDPMP):

By making adjustments in GDPMP, we can derive other aggregates.

Gross Domestic Product at Factor Cost (GDPFC):

GDPFC = GDPMP – Net Indirect Taxes

(Net indirect tax= Indirect taxes – subsidies)

Net Domestic Product at Market Price (NDPMP):

NDPMP = GDPMP – Depreciation

Net Domestic Product at Factor Cost (NDPFC):

NDPFC = GDPMP – Net Indirect Taxes – Depreciation

NDPFC is also known as Domestic Income or Domestic factor income.

Relationship between Four Domestic Concepts:

Gross National Product (GNP)

Net factor income from abroad (Nfia)

Gross National Product at Market Price (GNPMP):

GNPMP = GDPMP + Net factor income from abroad

Gross National Product at Factor Cost (GNPFC):

GNPFC = GNPMP – Net Indirect Taxes

Net National Product at Market Price (NNPMP):

Net National Product at Factor Cost (NNPFC):

NNPFC = GNPMP – Net Indirect Taxes – Depreciation

It must be noted that NNPFC is also known as National Income.

Relationship between Four National Concepts:

You might also like