A.MEENAIAHLECTURER IN ECONOMICSN.G COLLEGE NALGONDA

NATIONAL INCOME MEANINGNATIONAL INCOME MEANINGThe concept of national income occupies an

important place in economic theory.

National Income is the flow of goods and services of a nation during a year

National income is the aggregate money value of all final goods and services in a country during a year.

Marshall “ The labour and capital of a country, acting upon its natural resources, produce annually a certain net aggregate of commodities, material and immaterial, including services of all kinds.”

A.C Pigou “ The national dividend is that part of the objective income of the community including of course, income derived from abroad, which can be measured in money.”

Concepts of National IncomeConcepts of National Income

1. Gross National Product (GNP).2. Net National Product ( NNP).3. Gross Domestic Product ( GDP).4. Net Domestic Product ( NDP).5. Net National Product at factor Cost.6. Personal Income. (PI)7. Disposable Personal Income. (DPI)8. Percapita Income.9. Nominal and Real GDP

Gross National Product (GDP) is defined as the sum of the gross domestic product and net factors income from abroad .

GNP= C+I+G+(X-M)+(R-P) C= Total consumption I= Total Investment G= Govt Expenditure X= Exports M=Imports R= Receipts P= Payments

Net National Product ( NNP) is the net production of final goods and services in a country during the year. It is GNP-depreciation. NNP also referred to as National Income at Market Prices.

NNP= GNP-D

Gross Domestic Product ( GDP) is the money value of all final goods and services produced in the domestic territory of a country during a year

GDP= C + I + G ( X-M)

4.Net Domestic Product ( NDP).

Net Domestic Product ( NDP): When depreciation is substracted from GDP, we get net domestic product.

NDP=GDP-D

5.Net National Product at factor 5.Net National Product at factor CostCost

Net National Product at factor Cost or National Income is the total of all income payment received by the factors of production land, labour , capital and organisation.

NNP at Factor cost= NNP - Ti + Su Ti= Indirect Taxes Su=Subsidies

Personal Income is that income which is actually received by the individuals in a country during the year from all sources. In order to derive personal income we have to deduct those amounts which are not available for distribution among the factors of production from NI, and we have to add transfer payments made by the government to NI.

PI=NNP-CT-UDP-SSC+TP

7.Disposable Personal Income. (DPI) Personal income accruing to individuals

is not available for being spent on consumption. Some part of the PI has to be paid by individuals to the government by way of personal direct taxes

PDI= PI- DT

Nominal and Real GDP

GDP at current prices or nominal GDP - GDP measured using the prices of the year for which it is calculated

Nominal GDP can be a misleading indicator of changes in output or income because it also embodies changes in the prices of goods and services.

Real GDP or GDP at constant prices measures the total value of output using the prices of a selected year (the base year).

Real GDP better for analysis overtime because it eliminates the effects of price changes

8.Percapita Income

The percapita Income can be found with the help of following formula

PCI= National Income/ Population

Real GDP

Nominal GDPReal GDP 100.

GDP deflator