NIA 2

National Income and Related Aggregates

SONU MALIK DPS VK.

Recapitulate

Gross Market price

- Consumption of Capital - Net Indirect Taxes - Net Factor Income from Abroad

Net Factor Cost Domestic

National

National Income Aggregates

1. 2. 3. 4. 5. 6. 7. 8. Gross Domestic Product at market price Gross National Product at market price Net Domestic Product at market price Net National Product at market price Gross Domestic Product at factor cost Gross National Product at factor cost Net Domestic Product at factor cost Net National Product at factor cost (GDPMP) (GNPMP) (NDPMP) (NNPMP) (GDPFC) (GNPFC) (NDPFC) (NNPFC)

Definitions
GDPMP
Value of all final goods and services Produced in the domestic territory in a given time period Valued at market price Includes depreciation

GNPMP
Value of all final goods and services Produced by the residents of an economy in a given time period Valued at market prices Includes net factor income from abroad Includes depreciation

Definitions
NDPMP
Value of all final goods and services Produced in the domestic territory in a given time period Valued at market prices Excludes depreciation

NNPMP
Value of all final goods and services Produced by the residents of an economy in a given period Valued at market price Includes net factor income from abroad Excludes depreciation

Definitions
GDPFC
Value of factor income received by factors of production in a given time period Takes place within the domestic territory Does not include net indirect taxes Includes depreciation

GNPFC
Value of factor income received by residents of a country in a given time period Includes net factor income from abroad Does not include net indirect taxes Includes depreciation

Definitions
NDPFC or Domestic Income
Value of factor incomes received by factors of production in a given time period Takes place within the domestic territory Excludes net indirect taxes Excludes depreciation

NNPFC or National Income

Value of factor incomes received by residents of a country in a given time period Includes net factor income from abroad Does not include net indirect taxes Does not include depreciation

Disposable Income & Related Aggregates

Disposable income is the income in the hands of the people Can be spent freely Includes both factor income and transfer receipts Transfer receipts alter the purchasing power of the people receiving it

Domestic Income Accruing to Private Sector

Domestic income accrues to the private and government sector
Net Domestic Product at Factor Cost

Product accruing to government

Property & entrepreneurial income Saving of non-departmental enterprises

Product accruing to private sector

NDPFC - product accruing to government = Product accruing to private sector

Private Income
Total income accruing to the private sector Private sector Firms and Households
Factor Income
Domestic product accruing to private sector Net factor income from abroad (NFIFA)

Transfer Receipts
Interest on national debt Current transfers from government Net current transfers from rest of the world

Private Income

Domestic product accruing to private sector + NFIFA + transfer receipts = Private Income

Personal Income
Total income (factor and transfer) accruing to households
Private Income

Income not going to Households

Corporate taxes Savings of private enterprises

Income to Households

Private Income Income not going to households = Personal lncome

Personal Disposable Income

Total income (factor & transfer) that households can spend freely
Personal Income

Compulsory Payments
Direct taxes Miscellaneous payments

Income spent freely (Personal Disposable Income)

Consumption

Savings

Personal income Compulsory payments = Personal disposable income Personal disposable income = Consumption + Savings

National Disposable Income

Income that a nation can spend freely Net National Disposable Income

National Income (NNPFC) + Net Indirect Taxes (transfer receipts of government) + Net current transfers from the rest of the world Gross National Disposable Income = Net National Disposable Income + Depreciation (Consumption of Capital)