Calculation of chapter 2: National Income

Accounting
Net National product(NNP)
NNP=GNP-depreciation
Market price(mp)
Factor cost(fc)
GDP&GNP at market price & factor cost

GDP
GDPfc

GDPmp

+Indirect taxes

+subsidies

-Subsidies

-Indirect taxes

GDPmp

GDPfc

GNP
GNPfc

GNPmp

+Indirect taxes

+subsidies

-Subsidies

-Indirect taxes

GNPmp

GNPfc

1

1st Formula Gross Domestic Product(GDP) + Factor income from abroad -Factor income paid abroad __________________________ Gross National Product(GNP) 2nd Formula Gross National Product(GNP) +Factor income paid abroad -Factor income from abroad __________________________ Gross Domestic Product(GDP) (National income) National income: Personal income (-) Transfer Payment (-) Interest in consumer loans (-) Interest on government loans + Corporate profit taxes + Undistributed corporate profit (Personal Income) 2 .

Method 1: Method 2: salaries Wages and National income + Rent + Transfer payments +Interest +Interest on government loans +Profit +Interest on consumer loans +Dividends +Transfer Payments (-) Taxes on corporate profit +Interest on government loans (-) Undistributed corporate +Interest on consumer loans (-) Taxes on corporate profit (-) Undistributed corporate profit (Disposable Personal Income) Disposable personal income= Personal Income-Personal Income Tax (Per Capita Income) Per capita income=National income/Total population Methods of calculating national income 3 .

Factor income from abroad Factor income paid abroad Net factor income from abroad (+) GNP at market price (GNPmp) 7. Depreciation (-) NNP at factor cost (NNPfc)/National income 2nd Method: Product approach 1. Changes in inventory (+) 5. fishery. Agriculture. Export of goods and services (X) Import of goods and services (M) Net exports(X-M) (+) GDP at market price (GDPmp) 6.1st method: Expenditure approach 1. Subsidies (+) GNP at factor cost (GNPfc) 9. livestock. Government expenditure (G) (+) 4. Indirect taxes (-) 8. Household consumption expenditure (C) (+) 2. Private and public investment expenditure (I) (+) 3. and forestry 4 (+) .

Government services (+) 10. Other services (+) GDP at market price (GDPmp) 11. storage and communications (+) 7. hotels and restaurants (+) 8. Utilities (+) 6. insurance. Construction (+) 5. Subsidies (+) GNP at factor cost (GNPfc) 14. Depreciation (-) 5 . Mining and quarrying (+) 3. Trade and commerce. Factor income from abroad Factor income paid abroad Net factor from abroad (+) GNP at market price (GNPmp) 12. and real estate (+) 9. Industries (+) 4. Transportation. Indirect taxes (-) 13. Finance.2.

Salaries and wages (+) 2. Private corporate income (+) 5. Net interest Gross interest(+) Interest on consumer loans(-) Interest on government loans(-) (+) 3.NNP at factor cost (NNPfc)/National income 3rd method: Income approach 1. Rent (+) 4. Corporate profit Dividends(+) Undistributed profit(+) Corporate income tax (+) NNP at factor cost(NNPfc)/National income 6 .