Some Basic Concepts Of Macroeconomics | National Income Accounting | Notes | Summary - Zigya

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National Income Accounting

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Some Basic Concepts Of Macroeconomics

  1. Meaning of National Income: It is the sum of factor incomes earned by normal residents of a country in the form of rent, wages, interest and profit in an accounting year.
  2. Final Goods: All goods which are meant either for consumption by consumers or for investment by firms are called final goods.
  3. Intermediate Goods: All goods which are used as raw material for further production of others goods or for resale in the same year.
  4. Consumer Goods: The goods which satisfy the wants of consumers directly are called consumer goods.
  5. Producer Goods: The goods which help in the production of other goods and services are called producer goods or capital goods.
  6. Factor Cost: It refers to all factor payments made by the producing unit to the factors of production for rendering productive services.
  7. Mark price: It is the price at which a commodity is sold and purchased in the market.
     Market Price (MP) = Factor cost + Net Indirect Taxes (Indirect Taxes - Subsidies).
  8. Indirect Taxes: Taxes which are levied by the government on production and sale of commodities are called indirect taxes.
  9. Subsidies: Cash grants given by the government to the enterprises to encourage production.
  10. Net Factor Income from Abroad (NFIA): Factor income earned from abroad by residents - Factor income of non-residents in domestic territory.
                 NFIA = Net Compensation of employees + Net income from property and entrepreneurship  + Net retained earnings of resident companies abroad.
  11. National Income(NNPFC) = Domestic Income + NFIA
  12. Domestic Income (NDPFC) = National Income - NFIA
  13. NDPMP = GDPMP - Depreciation.
  14. GNPMP = GDPMP + Net factor income from abroad.
  15. NNPMP = GNPMP - Depreciation.
  16. GDPFC = GDPMP - Net Indirect Taxes
  17. NDPFC = GDPFC - Depreciation.
  18. GNPFC = GDPFC + Net Factor income from abroad.
  19. NNPFC = GNPFC - Depreciation.
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