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SS2: ECONOMICS - 3RD TERM

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  1. Public Finance I | Week 1
    5 Topics
  2. Public Finance II | Week 2
    7 Topics
    |
    1 Quiz
  3. Balanced and Unbalanced Budgets| Week 3
    5 Topics
    |
    1 Quiz
  4. Elements of National Income Accounting | Week 4
    5 Topics
  5. Elements of National Income Accounting II | Week 5
    6 Topics
  6. Income Determination | Week 6
    4 Topics
    |
    1 Quiz
  7. Financial Market | Week 7
    1 Topic
  8. Demand for and Supply of Money | Week 8
    8 Topics
    |
    1 Quiz
  9. Inflation | Week 9
    7 Topics
  10. Deflation | Week 10
    5 Topics
    |
    1 Quiz



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1. National Income

This may be defined as the money value of the total volume of production of goods and services in a country.

National income consists of the value of goods produced within a country plus net income from abroad, which is measured on yearly basis in monetary terms.

Specifically, it is the total income obtained from economic activities during a specified period of time, (usually, one year), after allowances has been made for capital consumption.

2. Gross Domestic Product (GDP)

This is the money value of all the goods and services produced within a country but excluding net income from abroad. Gross Domestic Product is an approximation of national income.

3. Gross national Product (GNP)

This may be defined as the money value of all the goods and services produced by the nationals of a given country within a year. It consists of the value of all the goods produced within a country plus net income from abroad, which is measured on a yearly basis in monetary terms. It is also an approximate measure of national income.

4. Personal Income

This is the income of the individuals of a country in one year. Personal income is not equal to national income because personal income includes transfer payment.

5. Real Income

It is defined as money in terms of the goods and services it can buy. It is the deflated national income.

6. Net National Product (NNP)

This is the value of goods and services produced by the nationals of a country less depreciation.

GNP – Depreciation = NNP

7. Depreciation

This is the reduction in the value of an asset (machinery) through wear and tear, which occurs with use. If no steps are taken to maintain the productive capacity of the national stocks, the flow of goods and services will eventually decrease thus, the true net income or product does not include all final goods and services made available during the year but only that part left while depreciation of the capital goods has been taken into account. It is more common to the GDP or GNP, N.I.

8. GDP As Factor Cost

This is GDP at market prices less indirect taxes and subsides.

9. GNP At Factor Cost

This is obtained by subtracting all indirect taxes and subsides from GNP market prices.

10. Net National Product At Factor Cost

It is GNP less depreciation, indirect taxes and subsides. 

GNP – (Depreciation + Taxes + Subsides).

11. NNP At Market Prices

This is GNP at market prices with the addition of indirect taxes and subsides less depreciation i.e.

(GNP + Taxes + Subsidies) – Depreciation.

12. PER Capital Income

This is the national income of a country divided by the population of that country.

PCI = \( \frac{National\; Income}{Population} \)

The standard of living of the people is dependent on this ratio. All things being equal, the higher per capital income, the higher the standard of living.

13. Disposable  Income

This is income after taxes. It is the actual income, which can be spent on consumption or saved by individuals. It is calculated as personal income less personal income tax i.e.

P.I – P.E. Tax

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