National Income Santosh Borkakati Asst. Professor
Description: National Income Santosh Borkakati Asst. Professor Department of Economics Mangaldai College National Income Is defined as total market value of all final goods services produced by residents of a country while working both within or
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slide1. National Income Santosh Borkakati
Asst. Professor
Department of Economics
Mangaldai College<br>
slide2. National Income Is defined as total market value of all final goods & services produced by residents of a country while working both within or outside the domestic territory in an accounting year.
NI is expressed in monetary terms.
It includes only the value of final goods & services.
NI Is expressed over 1 financial year.
Only economic goods and services are included.<br>
slide3. National Income -Excluded Items It excludes income from illegal activities – smuggling, black marketing, gambling etc.,
It does not includes transfer payments – old age pension, scholarship to students etc.,
Transfer payment are those earning for which no contribution is made to the flow of goods & services
T.P are received without doing or producing any commodity or services.
NI excludes sale & purchase of second hand goods.<br>
slide4. Concepts of National Income GDP
GNP
NDPMP
NDPFC
NNPMP
NNPFC
Private Income
Personal Income
Personal Disposable Income<br>
slide5. Concepts of National Income GDP : Value of all final goods and services produced within the domestic territory of a country during an accounting year.
GNP = GDP + Net factor income from abroad<br>
slide7. Concepts of National Income<br>
slide8. Concepts of National Income<br>
slide9. Private Income Private income is income obtained by private individuals from any source, productive or otherwise, and the retained income of corporations.
Private Income= NNPFC + Transfer Payments + Interest on Public Debt – Social Security Contributions – Profits and Surpluses of Public Sector Undertaking.<br>
slide10. Personal Income Personal Income is the total income received by the individuals from all sources, productive or otherwise, before direct taxes.
Personal Income= NNPFC+ Transfer Payments + Interest on Public Debt – Social Security Contributions – Profits and Surpluses of Public Sector Undertaking – undistributed corporate profit – profit taxes.<br>
slide11. Disposable Income Disposable income is the actual income available to the individuals for expenditure.
Disposable Income= Personal Income – Direct Taxes<br>
slide12. Per Capita Income Per Capita Income = National Income
Total Population<br>
slide13. Methods of Measuring NI Value added method/Product Method
Income method
Expenditure method<br>
slide14. Steps involved in Value Added Method Value added refers to the addition of value to the raw material (intermediate goods) by a firm, by virtue of its productive activities. It is the contribution of an enterprise to the current flow of goods and services. It is calculated as the difference between value of output and value of intermediate consumption.
Value Added = Value of Output – Intermediate Consumption
Example of Concept of Value Added:
Suppose a baker needs only flour to produce bread. He purchases flour as inputs worth Rs.500 from the miller and then by virtue of its productive activities, converts the flour into bread and sells the bread for Rs. 700.
The baker has added a value of Rs. 200 to the total flow of final goods and services in the economy.<br>
slide15. Steps involved in Value Added Method Steps of Value Added Method:
The first step is to identify and classify all the producing enterprises of an economy into primary, secondary and tertiary sectors.
In the second step, Gross Value Added at Market Price (GVAMP) of each sector is calculated.
Total of GVAMPÂ of all sectors give GDPMP,.
GDPMP.  = ∑GVAMP<br>
slide16. Steps involved in Income Method Identifying the producing units
Classifying the factor income<br>
slide17. Steps involved in Expenditure Method To identify economic units incurring final expenditure.
Classification of final expenditure.
Private final consumption expenditure
Govt. final consumption expenditure
Gross fixed capital formation
Change in stocks
Net Exports
GDPMP = PFCE + GFFCE + GFCF + Change in Stocks + Net Exports<br>
slide18. Thank You<br>
Asst. Professor
Department of Economics
Mangaldai College<br>
slide2. National Income Is defined as total market value of all final goods & services produced by residents of a country while working both within or outside the domestic territory in an accounting year.
NI is expressed in monetary terms.
It includes only the value of final goods & services.
NI Is expressed over 1 financial year.
Only economic goods and services are included.<br>
slide3. National Income -Excluded Items It excludes income from illegal activities – smuggling, black marketing, gambling etc.,
It does not includes transfer payments – old age pension, scholarship to students etc.,
Transfer payment are those earning for which no contribution is made to the flow of goods & services
T.P are received without doing or producing any commodity or services.
NI excludes sale & purchase of second hand goods.<br>
slide4. Concepts of National Income GDP
GNP
NDPMP
NDPFC
NNPMP
NNPFC
Private Income
Personal Income
Personal Disposable Income<br>
slide5. Concepts of National Income GDP : Value of all final goods and services produced within the domestic territory of a country during an accounting year.
GNP = GDP + Net factor income from abroad<br>
slide7. Concepts of National Income<br>
slide8. Concepts of National Income<br>
slide9. Private Income Private income is income obtained by private individuals from any source, productive or otherwise, and the retained income of corporations.
Private Income= NNPFC + Transfer Payments + Interest on Public Debt – Social Security Contributions – Profits and Surpluses of Public Sector Undertaking.<br>
slide10. Personal Income Personal Income is the total income received by the individuals from all sources, productive or otherwise, before direct taxes.
Personal Income= NNPFC+ Transfer Payments + Interest on Public Debt – Social Security Contributions – Profits and Surpluses of Public Sector Undertaking – undistributed corporate profit – profit taxes.<br>
slide11. Disposable Income Disposable income is the actual income available to the individuals for expenditure.
Disposable Income= Personal Income – Direct Taxes<br>
slide12. Per Capita Income Per Capita Income = National Income
Total Population<br>
slide13. Methods of Measuring NI Value added method/Product Method
Income method
Expenditure method<br>
slide14. Steps involved in Value Added Method Value added refers to the addition of value to the raw material (intermediate goods) by a firm, by virtue of its productive activities. It is the contribution of an enterprise to the current flow of goods and services. It is calculated as the difference between value of output and value of intermediate consumption.
Value Added = Value of Output – Intermediate Consumption
Example of Concept of Value Added:
Suppose a baker needs only flour to produce bread. He purchases flour as inputs worth Rs.500 from the miller and then by virtue of its productive activities, converts the flour into bread and sells the bread for Rs. 700.
The baker has added a value of Rs. 200 to the total flow of final goods and services in the economy.<br>
slide15. Steps involved in Value Added Method Steps of Value Added Method:
The first step is to identify and classify all the producing enterprises of an economy into primary, secondary and tertiary sectors.
In the second step, Gross Value Added at Market Price (GVAMP) of each sector is calculated.
Total of GVAMPÂ of all sectors give GDPMP,.
GDPMP.  = ∑GVAMP<br>
slide16. Steps involved in Income Method Identifying the producing units
Classifying the factor income<br>
slide17. Steps involved in Expenditure Method To identify economic units incurring final expenditure.
Classification of final expenditure.
Private final consumption expenditure
Govt. final consumption expenditure
Gross fixed capital formation
Change in stocks
Net Exports
GDPMP = PFCE + GFFCE + GFCF + Change in Stocks + Net Exports<br>
slide18. Thank You<br>