Topic 2: National Income Accounting

At the end of this chapter, the student should be able to:

 Define concepts in national income accounting

 Gross Domestic Product (GDP)

 Gross National Product (GNP)

 Net National Product (NNP)

 Market Price and Factor Cost

 Personal Income (PI)

 Disposable Personal Income (DPI)

 Per Capita Income

 Calculated the national income accounting
 Expenditure Approach

 Income Approach

 Product Approach

 Explain the problems related to national income

Difficulties in calculating national income

Difficulties in compare national income

The uses of national income data

 National income or national product or national
expenditure is the total value of all goods or services
produced or created by a nation within a certain period
of time, usually one year.
Pendapatan negara atau keluaran negara atau
perbelanjaan negara adalah jumlah nilai semua barang
atau perkhidmatan yang dikeluarkan atau yang dicipta
oleh negara dalam tempoh masa tertentu, biasanya satu
tahun.
 National income also refers to the total value of
expenditure by all groups of a population on goods and
services produced by an economy in one year.
Pendapatan negara juga merujuk kepada jumlah nilai
perbelanjaan oleh semua golongan penduduk ke atas
barangan dan perkhidmatan yang dihasilkan oleh
ekonomi dalam satu tahun.
 National income is also the total value of income
received by all factors of production such as labour, land,
capital, and entrepreneurs in a nation in a certain period
of time, usually one year.
Pendapatan negara juga adalah jumlah nilai pendapatan
yang diterima oleh semua faktor pengeluaran seperti
buruh, tanah, modal, dan usahawan di sesebuah negara
dalam tempoh masa tertentu, biasanya satu tahun.
Gross Domestic Product (GDP)/
Keluaran Dalam Negara Kasar (KDNK)

 GDP is the total value of all final goods and services

produced by factors of production in the country
within a year.
KDNK ialah jumlah nilai semua barang dan
perkhidmatan akhir yang dihasilkan oleh faktor
pengeluaran yang terdapat di dalam negara dalam
tempoh setahun.
 The value of GDP does not take into account whether
the factors of production are owned by local citizens or
by citizens of other nations.
Nilai KDNK tidak mengambil kira sama ada faktor-faktor
pengeluaran itu dimiliki oleh warga tempatan atau warga
negara-negara lain.

 GDP excludes goods and services produced by

Malaysian citizens working overseas as well as
intermediate goods.
KDNK tidak termasuk barangan dan perkhidmatan yang
dihasilkan oleh rakyat Malaysia yang bekerja di luar
negara dan juga barangan perantaraan.
 The output produced by foreign workers in Malaysia
such as by Indonesians or Nepalese will be included in
the GDP Malaysia.
Output yang dihasilkan oleh pekerja asing di Malaysia
seperti pekerja asing dari Indonesia atau Nepal akan
dimasukkan ke dalam KDNK Malaysia.
 Final goods – are goods that are ready to be used by
the end user.
Barangan akhir - adalah barang-barang yang sedia
untuk digunakan oleh pengguna akhir.
Atau: Barang yang dikeluarkan untuk penggunaan unit
ekonomi dengan tujuan mendapat utiliti atau kepuasan,
bukan untuk tujuan mengeluarkan barang-barang lain.
 Contoh: roti dan kereta, yang penggunaannya bertujuan
untuk mendapatkan kepuasan.
 Intermediate goods – are goods that are used as input
to produce final goods.
Barang perantaraan - adalah barang-barang yang
digunakan sebagai input untuk mengeluarkan barangan
akhir.
Contoh: tepung gandum untuk membuat roti, besi dan
keluli untuk membuat kereta.
Gross National Product (GNP) /
Keluaran Negara Kasar

 GNP is the total final value of goods and services

produced by factors of production owned by citizens
of the nation, regardless of where they are located,
within one year.
KNK ialah jumlah nilai semua barang dan perkhidmatan
akhir yang dihasilkan oleh faktor pengeluaran yang
dimiliki oleh rakyat negara ini, tidak kira di mana mereka
berada, dalam masa satu tahun.
 For example, income earned by Malaysians working
abroad in countries like Singapore, Japan, United
States, etc, will be included in the GNP Malaysia.
Sebagai contoh, pendapatan yang diperolehi oleh rakyat
Malaysia yang bekerja di luar negara di negara-negara
seperti Singapura, Jepun, Amerika Syarikat, dan lain-
lain, akan dimasukkan ke dalam KNK Malaysia.

 However, the income earned by foreign workers working

in Malaysia will not be included in the GNP Malaysia.
Walau bagaimanapun, pendapatan yang diperolehi oleh
pekerja asing yang bekerja di Malaysia tidak akan
dimasukkan ke dalam KNK Malaysia.
 While calculating the GNP, only final goods and services
that satisfy consumption needs will be included and the
value of intermediate goods and inputs will be excluded
to avoid double counting.
Walaupun mengira KNK, hanya barangan dan
perkhidmatan akhir yang memenuhi keperluan
penggunaan akan dimasukkan dan nilai barang-barang
perantaraan dan input akan dikecualikan untuk
mengelakkan pengiraan dua kali.
 The difference in value between GDP and GNP is due to
the net factor income from abroad.
 The net factor income from abroad is calculated by
subtracting the factor income paid abroad from the factor
income received from abroad.

Net factor income from abroad =

Factor income received from abroad – Factor
income paid abroad
 Factor income paid abroad is the payment made to
foreign citizens for the use of factors of production
owned by foreign citizens within the nation.
Pendapatan faktor dibayar ke luar negara ialah bayaran
yang dibuat kepada warga asing untuk penggunaan
faktor pengeluaran yang dimiliki oleh warganegara asing
di dalam negara.
 Factor income received from abroad is the income
received by citizens of the nation for the use of factors of
production owned by the nation that are located abroad.
Pendapatan faktor yang diterima dari luar negara adalah
pendapatan yang diterima oleh rakyat negara ini untuk
kegunaan faktor pengeluaran yang dimiliki oleh negara
yang terletak di luar negara.
 Net factor income from abroad will be included in the
calculation of GNP. Net factor income paid abroad will be
included in the calculation of GDP.
 Therefore, the relationship between GDP and GNP can
be shown as:

GNP = GDP + net factor income from abroad

or
GNP = GDP + (factor income received from abroad –
factor income paid abroad)
 Net National Product (NNP) is obtained when the value
of depreciation is subtracted from the GNP.
Keluaran Negara Bersih diperolehi apabila nilai susut
nilai ditolak daripada KNK.
 Depreciation occurs when capital equipment used in the
production process becomes obsolete after a certain
period of usage.
 Susut nilai berlaku apabila peralatan modal yang
digunakan dalam proses pengeluaran menjadi usang
selepas tempoh tertentu penggunaan.

NNP = GNP – depreciation

Market Price and Factor Cost

 Market price refers to the current price in the market

through the forces of demand and supply. Market prices
are the actual prices paid by consumers. Market prices
includes indirect taxes and excludes subsidies given to
producers.
Harga pasaran merujuk kepada harga semasa dalam
pasaran melalui kuasa-kuasa permintaan dan bekalan.
Harga pasaran adalah harga sebenar yang dibayar oleh
pengguna. Harga pasaran termasuk cukai tidak
langsung dan tidak termasuk subsidi yang diberikan
kepada pengeluar.
 Therefore, the factor cost is the real price that is earned
by producers or sellers.
Oleh itu, kos faktor adalah harga sebenar yang
diperolehi oleh pengeluar atau penjual.

 The difference between gross domestic product at

market price and the factor cost are due to indirect
taxes and subsidies.
 Indirect taxes are levied on goods such as excise duty,
import duty and sales tax.
Cukai tidak langsung dikenakan ke atas barangan
seperti duti eksais, duti import dan cukai jualan.

 Subsidy is an incentive from the government to

encourage producers to produce more.
Subsidi adalah insentif daripada kerajaan untuk
menggalakkan pengeluar untuk menghasilkan lebih
banyak.
 In order to obtain the GDP at market price, we have to
include indirect taxes and excludes the subsidies given
by the government. However, to obtain the GDP at factor
cost, we have subtract indirect taxes and add subsidies
to GDP at market price.

GDPfc = GDPmp – Indirect taxes + subsidies

 The same calculation can also be applied to find the

GNP at factor cost.

GNPfc = GNPmp – Indirect taxes + subsidies

 National income is also known as Net National Product
at factor cost.
 National income consists of wages and salaries, rent,
net interest, corporate profit, and private income
(individual income).
 National income includes subsidies but excludes
depreciation and indirect taxes.
 National Income can be derived from the net national
product (NNP) at market price by including subsidies
and subtracting indirect taxes.
 The difference between NNP and NI is the market price
and factor cost.

National Income / NNPfc = GNPfc – depreciation

Or
National Income at factor cost
= NNP at market price + Subsidies – Indirect taxes
Or
National Income at market price
= NNP at factor cost - Subsidies + Indirect taxes
 Personal Income (PI) or private income is the income
received by an individual as payment for factors of
production or as payment for items other than factors of
production.
Pendapatan Peribadi (PI) atau pendapatan peribadi
adalah pendapatan yang diterima oleh seseorang
individu sebagai bayaran untuk faktor pengeluaran atau
sebagai pembayaran untuk item selain daripada faktor-
faktor pengeluaran.
 Income from factors of production consists of wages and
salaries, rent, interest, profits, and dividends. Income for
item other than factors of production consists of transfer
payments such as financial assistance, scholarships,
donations, and unemployment allowance.
Pendapatan daripada faktor pengeluaran terdiri daripada
gaji dan upah, sewa, faedah, keuntungan dan dividen.
Pendapatan untuk item selain daripada faktor
pengeluaran terdiri daripada bayaran pindahan seperti
bantuan kewangan, biasiswa, derma, dan elaun
pengangguran.
 Personal income consists of the following elements:
a) National income, less undistributed corporate profit,
taxes on corporate profit and employees provident
fund (EPF) contributions.
Pendapatan negara, tolak keuntungan korporat tidak
diagihkan, cukai keuntungan korporat dan
sumbangan Kumpulan Wang Simpanan Pekerja
(KWSP).

b) Transfer payments, including parments to retired,

unemployed, disabled, and senior citizens.
Bayaran pindahan, termasuk bayaran kepada
pesara, penganggur, orang kurang upaya dan warga
tua.
 Interest on government loans and consumer loans are
included in personal income, because personal income
consists of income received, regardless of whether the
income is generated from contributions to national
production or not.
Faedah ke atas pinjaman kerajaan dan pinjaman
pengguna termasuk dalam pendapatan peribadi, kerana
pendapatan peribadi terdiri daripada pendapatan yang
diterima, tidak kira sama ada pendapatan dijana
daripada sumbangan kepada pengeluaran negara atau
tidak.
 There are two methos to calculate personal income:

Personal income = Wages and salaries + Rent + Interest + Profit + Dividens + Transfer
payments + Interest on government loans + Interest on consumer
loans – Taxes on corporate profit – Undistributed corporate profit
(Retained earning) – EPF contributions
And,

Personal income = National Income + Transfer payments + Interest on government

loans + Interest on consumer loans – Taxes on corporate profit –
Undistributed corporate profit (Retained earning) – EPF contributions
 Disposable income or disposable personal income (DPI)
is the total income received and available for an
individual to spend on goods and services produced by
an economy.
Pendapatan boleh guna atau pendapatan boleh guna
peribadi (DPI) adalah jumlah pendapatan yang diterima
dan boleh digunakan oleh individu untuk berbelanja ke
atas barangan dan perkhidmatan yang dihasilkan oleh
ekonomi.
 Not all personal income is available to be spent or
saved, as a portion must be used to pay personal
income tax to the government.
Tidak semua pendapatan peribadi yang ada boleh
dibelanjakan atau disimpan, sebahagian perlu
digunakan untuk membayar cukai pendapatan
perseorangan kepada kerajaan.
 Thus, the Disposable Personal Income can be obtained
by deducting personal income tax from personal income.

Disposable Personal Income (DPI) =

Personal Income – Personal income tax
 Per capita income is the average income of the citizens
of a nation, calculated by dividing the national income for
a certain year by the population at that year.
Pendapatan per kapita adalah pendapatan purata rakyat
sesebuah negara, dikira dengan membahagikan
pendapatan negara bagi tahun tertentu dengan jumlah
penduduk pada tahun itu.

Per capita income = National Income / Total Population

 Per capita income is influenced by the standard of living,
and is not suitable to be used to measure the growth of
an economy over time.
Pendapatan per kapita dipengaruhi oleh taraf hidup, dan
tidak sesuai digunakan untuk mengukur pertumbuhan
ekonomi dari masa ke masa.

 Real per capita income is the per capita income derived

from the value of national income calculated using fixed
prices.
Pendapatan per kapita benar adalah pendapatan per
kapita yang diperolehi daripada nilai pendapatan negara
yang dikira menggunakan harga tetap.
 Therefore, real per capita income is usually used to
measure the growth of an economy.
Oleh itu, pendapatan per kapita benar biasanya
digunakan untuk mengukur pertumbuhan ekonomi.

Economic growth rate = RPCI2 – RPCI1

RPCI1 X 100

* RPCI – Real Per Capita Income

Example:
The real per capita income for Malaysia for the years
2010 and 2011 are RM3369 and RM3461 respectively.
What is the rate of economic growth in 2011?