07-05-2014, 03:07 PM
National Income Analysis
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Definitions of National Income
According to Simon Kuznets,
National income is net output of goods and services flowing during the year from country’s productive system into the hands of actual consumers or into net additions to countries stock of capital goods
The national income committee defined the concept of national income in a simplified manner.
According to this committee-
a national income estimate measures volume of commodities and services turned out in a specified period counted without duplication
Concepts of national income
Gross National Product
GNP= C+IG+G+(X-M)+NFIA
C- Private Final Consumption Expenditure
IG-Gross Investment
G-Government Expenditure
(X-M)-Net Exports(Exports-Imports)
NFIA-Net Factor Income from Abroad
NET NATIONAL PRODUCT
NNP= DFI+NFIA
DFI-DOMESTIC FACTOR INCOME
NFIA-Net factor income from abroad
Or
NNP= GNP-Depreciation
NNP also known as national income at market prices
PERSONAL INCOME(PI)
Personal income aggregate payment actually received by the individuals or house hold with in domestic territoryof a country from all source in an accounting year
It means aggregate money payments received by way of wage interest profits as well as rents
Personal Income = National Income - Corporate Taxes-Undistributed Corporate Savings Or Profits-Social Security Contribution + Transfer Payments
Expenditure method
It is known as outlay method
Expenditure by manufacturers on investment of goods
Expenditure by consumers on commodities and services
Expenditure by government on consumption and capital goods