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Basic Concepts of National-Income

Gross domestic product (GDP) at market price measures the total market value of all goods and services produced domestically in a year. Net domestic product (NDP) at market price is equal to GDP minus depreciation. Net national product (NNP) at market price is equal to NDP plus net factor income from abroad. NNP and GDP can also be calculated at factor cost by subtracting indirect taxes and adding subsidies.

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Srushti Agarwal
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515 views8 pages

Basic Concepts of National-Income

Gross domestic product (GDP) at market price measures the total market value of all goods and services produced domestically in a year. Net domestic product (NDP) at market price is equal to GDP minus depreciation. Net national product (NNP) at market price is equal to NDP plus net factor income from abroad. NNP and GDP can also be calculated at factor cost by subtracting indirect taxes and adding subsidies.

Uploaded by

Srushti Agarwal
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Basic Concepts of National Income

Amritpal Kaur
Gross Domestic Product at Market Price (GDP at MP)

 Market Value of Goods and Services produced


 in the domestic territory of the country
 in an accounting year.
Net Domestic Product at Market Price

 NDP at MP = GDP-Depreciation

 Depreciation = Decrease in the value of an asset due to


- wear and tear
- obsolescence
- passage of time
Net National Product at Market Price

 NNP at MP= NDP at MP + Net Factor Income from Abroad

 Net Factor Income from Abroad = Difference between


- Factor Income earned from abroad by normal
residents of a country
and
- Factor Income earned by Non-residents in
Domestic Territory
Net National Product at Factor Cost
 NNP at FC = NNP at MP – Net Indirect Taxes*
OR
NNP at MP – Indirect Taxes + Subsidies

* Net Indirect Taxes got detected as


- it’s not part of Factor Cost of Production.
Gross Domestic Product at Factor Cost

 GDP at FC = GDP at MP- Indirect Taxes + Subsidies


Net Domestic Product at Factor Cost

 NDP at FC = NDP at MP – Indirect Taxes + Subsidies

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