NATIONAL INCOME,METHODS OF MEASURING IT,DIFFICULTIES IN MEASURING NATIONAL INCOME ,ITS FORMULAS AND DEFINITIONS

This document includes:
1. Definitions of National Income, GDP, GNP, NNP.


2. Formulas of calculating GDP, GNP & NNP.


3. Methods of measuring national income.


4. Difficulties in measuring national income.

, DEFINITIONS:

1. National income:
National income is the monetary value of the
flow of goods and services produced by an economy during the
year, after indirect taxes.

2. GROSS DOMESTIC PRODUCT (GDP):
GDP is the market value of all
the product and services, which are produced within a country
during a selected time.
There are 2 types of GDP:


•Nominal GDP: It is the value of GDP evaluated at current
prices in a specific time period, this includes impact of inflation.
•Real GDP: It is an inflation adjusted value of GDP. It
expresses the value of goods and services produced in a country in a
base year price.


3. GROSS NATIONAL PRODUCT(GNP):
A country’s GDP, plus any
income earned by resident from overseas investment, minus
income earned by overseas resident with in a domestic country.

4. NET NATIONAL INCOME(NNP):
A country’s NNP removes capital
depreciation from the calculation of national income