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# National income & estimation models

Published on: Mar 3, 2016

#### Transcripts - National income & estimation models

• 1. WHAT IS NATIONAL INCOME?National income is the final outcome of all economic activities of a nation valued in terms of money.The sum total of the values of all goods and services produced in a year.It is the money value of the flow of goods and services available in an economy in a year.
• 2. Cont…. National Income Committee of India (1951) defines National Income as follows:“ A national income estimate measures the volume of commodities and services turned out during a given period counted without duplication.”Thus, National income is the aggregation of wages, rent, interest and profit or is the total of rewards to be given to the factors of production for any certain period.
• 3. CONCEPTS OF NATIONAL INCOME Gross Domestic Product- GDP Gross National Product- GNP Net National Product-NNP Personal Income- PI Disposable Personal Income-DPI Per Capita Income-PCI
• 4. Gross Domestic Product - GDP Gross domestic product (GDP) is a measure of the income and expenditures of an economy. It is the total market value of all final goods and services produced within a country in a given period of time. It includes both tangible goods (food, clothing, cars) and intangible services (haircuts, housecleaning, doctor visits).
• 5. Gross National Product - GNPGross national product (GNP) is the totalincome earned by a nation’s permanentresidents (called nationals).It differs from GDP by including incomethat our citizens earn abroad and excludingincome that foreigners earn here.GNP=GDP+X-M
• 6. Net National Product - NNP Net National Product (NNP) is the total income of the nation’s residents (GNP) minus losses from depreciation.NNP=GNP-Depreciation
• 7. Personal Income - PI Income earned by all the individuals and institutions during a year in a country. The entire national income does not reach individuals and institutions. A part of it goes by way of corporate taxes . PI = National Income –(Corporate taxes, undistributed profits, social security contributions) + Transfer Payments.
• 8. Disposable Personal Income - DPI Disposable personal income is the income that household and non corporate businesses have left after satisfying all their obligations to the government. Disposable personal income = Personal Income - Direct TaxesPer capita Income - PCI If the national income is divided by the total population we get the per capita income.
• 9. National Income = C + I + G + (X – M) where C = Consumption, I = Investment, G = Government and X is Export and M is Import.