2. Concepts of National Income

Over a period of time four ways to calculate the income of a nation have been developed by the economists. These four ways to calculate the national income of a nation are GDP, GNP, NDP and NNP.

2.1. GDP or Gross Domestic Product 2.1.1. Real GDP and Nominal GDP 2.2. GNP or Gross National Product 2.2.1. Net Factor Income from Abroad 2.3. Why GDP is the Most Acceptable Indicator Worldwide?2.4. Depreciation 2.5. NDP or Net Domestic Product NDP = GDP – Depreciation.2.6. NNP or Net National Product 2.7. The concept of Market Price and Factor Cost 2.8. National Income (NI)National Income at Factor Cost = NNP at Market Price – Indirect Taxes + Subsidies 2.9. Transfer Payments 2.10. Personal Income (PI)PI = NI + transfer payments — Corporate retained earnings, income taxes, social security taxes.