Sage-Tips

Is national income equal to net national product at factor cost?

Net National Product at factor cost is also called as national income. Net National Product at factor cost is equal to sum total of value added at factor cost or net domestic product at factor cost and net factor income from abroad.

Is net national product and national income same?

In national income accounting, net national income (NNI) is net national product (NNP) minus indirect taxes. Net national income encompasses the income of households, businesses, and the government.

Is national income at market price always greater than national income at factor cost?

National income at market price is always greater than national income at factor cost. Ans. False. National income at market price = National income at factor cost + Net indirect taxes.

Is national income calculated at factor cost?

Factor cost or national income by type of income is a measure of national income or output based on the cost of factors of production, instead of market prices. This allows the effect of any subsidy or indirect tax to be removed from the final measure. They are used to produce a given quantity of output in an economy.

What is meant by net national product at factor cost?

NNP at Factor Cost( Net National Product at Factor Cost) is the net money value of all the goods and services produces by normal residents of a country. It includes income of Indian citizens whether living in or outside India. It is net of the national income which means, it do not include depreciation.

How national income is calculated?

The Gross National Income is calculated by the following formula : GNI = GDP + compensation of employees and property income receivable from the rest of the world – compensation of employees and property income payable to the rest of the world. 3.7.

Why is net national product at market prices Nnpmp always greater than net national product at factor prices Nnpfc?

Answer: Thus, the market value of the national product exceeds the income paid to the factors of production by the amount of indirect taxes. Hence, net national income at factor cost shows the income actually received by the factors of production.

Why is national income calculated?

The National Income is based on the economic activity of a country. By measuring the national income, the authorities can analyse the economic growth of a country and accordingly take measures for future development and set up the economic policy.

What is the national income?

Concept of National Income. National income means the value of goods and services produced by a country during a financial year. Thus, it is the net result of all economic activities of any country during a period of one year and is valued in terms of money.

When national income will be equal to domestic income?

In closed economy, domestic income is equal to national income, as there will be no net factor income from abroad as there is no such sector called external sector or ‘rest of the world sector’ in a closed economy.

What is the national income at factor cost?

When national income is calculated with these cost of production then it is called national income at factor cost. After the production, the producer needs to pay taxes (both direct and indirect). So as a result the price of the goods increase.

What is nnnp at factor cost?

NNP at Factor Cost( Net National Product at Factor Cost) is the net money value of all the goods and services produces by normal residents of a country. It includes income of Indian citizens whether living in or outside India. It is net of the national income which means, it do not include depreciation.

What is the net of national income at market price?

So, when the value of goods are calculated by their market prices, it is called national income at market price. We use ‘net’, when we subtract the depreciation from any amount. So, net national income is national income – depreciation. Depreciation is the wear and tear cost of any capital goods.

How do you calculate net national income and national product?

National product(Y) = consumption + government spending + investments + (exports – imports) National income(N) = rental income of persons + personnel rental income + interest, dividends. Y=N, Net national income = National income – personnel rental income -statistical discrepancy. This is at market cost.