NATIONAL INCOME

National income is the final monetary value of all goods and services produced by a country during a certain time period say one year.

Production based definition /Marshall definition The labour and capital of a country acting on the national resources ,product annually a certain net aggregate of commodities and immaterial including services of all kinds. This is true national income or revenue of the country Monetary based definition /Pigou definition National dividend is that part of objective income of the commodity including of course ,derived from abroad which can be measured in money Consumption based definition /Fisher definition the true national income is that part of the annual net product which is directly consumed during that year

FEATURES OF NATIONAL INCOME

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It is monetary value of goods and services. It is related with any country It is a continues flow during a given period of time say one year Those goods and services having exchange value are concerned with national income While calculating it double counting should be avoided.

CONCEPT OF NATIONAL INCOME

Gross National Product(GNP):- GNP is the money value of all final goods and services produced within domestic territory of a country during a particular period of time. GDP ( at market price) = Price for goods produced + price for service produced

GDP ( At factor cost) = GDP(MV) - Indirect taxes + subsidies GDP ( Constant price) = ( GDP (CV) / Index of CY ) Index of BY

Net Domestic Product ( NDP) :- When depreciation is deducted GDP is called NDP NDP= GDP --- depreciation Gross National Product ( GNP) :- An economy not only work domestically but in abroad also. GNP includes the contribution made by our country by working in abroad . GNP= GDP + NFIA( net factor income from abroad) NFIA = Income from national in abroad --- income earned by foreign nation Net National Product( NNP) :- It is estimated after NFIA being added to the NDP NNP= NDP + NFIA

Personal Income ( PI):-It refers to the aggregate money payment actually received by the individuals or households with in the domestic territory during an accounting year. Private Income :- it is earned by the individuals and private sector within the domestic territory and from abroad.

private income= income from domestic product of the private sector + current transfer from govt + interest on national debt + net current transfer from rest of the world + net income from abroad

Disposable Personal Income (DPI) :- It is the personal income available for spending on consumption and savings. DPI = Personal income --- personal taxes

Per Capita income ( PCI) :- It is the average income of each citizen of the country . PCI = NET NATIONAL PRODUCT ( FACTOR COST) / TOTAL PRODUCTION

METHODS OF MEASUREMENT

Product method :-the total value of final goods and

services produced in a country during a year is calculated at market price. In it the data of all productive activities are collected and assessed at market price only the final goods and services are included and the intermediary goods are left out.

Income Method/national income by distribution

The net income payments received by all citizen of a country in a particular year are added up. All income are added accept income earned after transfer payment are not included.

Expenditure Method:- the total expenditure incurred by

the society in a particular year is added together and included personal consumption expenditure incurred by the society. in a particular year is added together and include personal consumption expenditure, net domestic investment , govt expenditure, net foreign investment. Concept is that income is equal to expenditure. Value added method :- the difference between the value of material output and input at each stage of production is the value added method .if all such differences are added up for all industries in the economy we arrive at the gross domestic product.