Measures of National Income
Measures Of National Income
There are a number of measures pertaining to national income and methods of measurement relating to them:
(A) Gross Domestic Product (GDP):
GDP is the total value of goods and services produced within the country during a year. It is defined as the market value of the output of final goods and services produced in the domestic territory of a country during an accounting year. There are three different ways to measure GDP - Product Method, Income Method and Expenditure Method.
(B) GDP at Factor Cost:
GDP at factor cost is the sum of net value added by all producers within the country. GDP at Factor Cost = Net Domestic Product at Factor Cost + Depreciation
(C) Net Domestic Product (NDP):
NDP is the value of net output of the economy during the year. Net Domestic Product GDP at Factor Cost - Depreciation
(D) Nominal and Real GDP:
When GDP is measured on the basis of current price, it is called GDP at current prices or nominal GDP. On the other hand, when GDP is calculated on the basis of fixed prices in some year, it is called GDP at constant prices or real GDP.
(E) GDP Deflator:
GDP deflator is an index of price changes of goods and services included in GDP.
(F) Gross National Product (GNP):
GNP is the total measure of the flow of goods and services at market value resulting from current production during a year in a country, including net income from abroad.
(G) Net National Product (NNP):
NNP includes the value of total output cf consumption goods and investment goods. But the process of production uses up a certain amount of fixed capital. Some fixed equipment wear out, its other components are damaged or destroyed, and still others are rendered obsolete through technological changes.
(H) Domestic Income:
Income generated (or earned) by factors of production within the country from its own resources is called domestic income or domestic product.
(I) Per Capita Income:
The average income of the people of a country in a particular year is called Per Capita Income that year. This concept also refers to the measurement of income at current prices and at constant prices.
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