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