![]() ![]() The net output of the country’s economy during a year is its NDP. (Market Price) LESS (Indirect Taxes ADD Subsidies) Net Domestic Product Net Indirect Taxes = Indirect Taxes Net of Subsidies received Revenue Price (or Factor Cost) = Market Price (net of) Net Indirect Taxes ![]() Thus services provided by service providers and goods sold by the producer is equal to revenue price. interest on capital, wages to labor, rent for land profit to the stakeholders. It Includes the cost of factors of production e.g. Such taxes tend to raise the prices of goods and services in the economy. The Actual transacted price including indirect taxes such as GST, Customs duty etc. GDP and GNP on the basis of Market Price and Factor Cost a) Market Price It also includes net income arising in a country from abroad. Different constituents of GDP are:įor calculation of GNP, we need to collect and assess the data from all productive activities, such as agricultural produce, wood, minerals, commodities, the contributions to production by transport, communications, insurance companies, professions such (as lawyers, doctors, teachers, etc). The total value of goods produced and services rendered within a country during a year is its Gross Domestic Product.įurther, GDP is calculated at market price and is defined as GDP at market prices. Simon Kuznets defines national income as “the net output of commodities and services flowing during the year from the country’s productive system in the hands of the ultimate consumers.”įollowing are the Modern National Income definition Read more about Income and Expenditure Method here in detail Thus there can be an underestimation of National Income. If on every movement commodity is taken into consideration then the value of National Income increases.Īlso, one other reason is that there are products which are produced but not marketed.įor example, In an agriculture-oriented country like India, there are commodities which though produced but are kept for self-consumption or exchanged with other commodities. There is a chance of double counting, hence National Income cannot be estimated correctly.įor example, a product runs in the supply from the producer to distributor to wholesaler to retailer and then to the ultimate consumer. The definition as laid down by Marshall is being criticized on the following grounds.ĭue to the varied category of goods and services, a correct estimation is very difficult. This is the true net annual income or revenue of the country or national dividend.” Source: Traditional DefinitionĪccording to Marshall: “The labor and capital of a country acting on its natural resources produce annually a certain net aggregate of commodities, material and immaterial including services of all kinds. The progress of a country can be determined by the growth of the national income of the country National Income Definition It includes payments made to all resources either in the form of wages, interest, rent, and profits. The National Income is the total amount of income accruing to a country from economic activities in a years time. The concept of Consumption, Saving, and Investment.3 Question on National Income Browse more Topics under National Income ![]()
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