Question

Briefly explain various terms associated with measuring national income.

Answer 1

Various terms associated with measuring of national income.
(i) Gross National Product or GNP is the total value of goods and services produced and income received in a year by domestic residents of a country. It excludes profits earned from capital invested abroad.
(ii) Gross Domestic Product or GDP is the total value of output of goods and services produced by the factors of production within the geographical boundaries of the country.
(iii) Net National Product or NNP refers to gross national product, i.e., the total market value of all final goods and services produced by the factors of productions of a country or other polity during a given time period, minus depreciation.
(iv) Net Domestic Product or NDP is a part of Gross Domestic Product. It is obtained from the Gross Domestic Productby deducting the Quantum of ten wear and tear expenses (depreciation).
NDP = GDP – Depreciation
(v) Per Capita Income or PCI is an indicator to show the living standard of people in a country. It is obtained by dividing the National Income by the population of a country.
Per Capita Income = National Income Population
(vi) Personal Income or PI is the total money income received by individuals and households of a country from all possible services before direct taxes. Personal income can be expressed as follows:
PI = NI Corporate Income Texes – Undistributed Corporate Profits – Social Security Contributions + Transfer payment.
(vii) Disposable Income or DI means actual income which can be spent on consumption by . individuals and families. It can expressed as DPI = PI – Direct Taxes.