National Income and The Economy





Economy-





Economy of a country refers to economic aspects of a country.

It also refers to a system having well defined principles and established institutions to implement those principles .











Economic activities-





All those activities which add economic value are called economic activities.

Examples of economic activities are production, consumption and investment.









The term residents refers to those individuals or institutions whose economic interest lies in the country they live .













National Income -





National income of a country refers to the sum of incomes earned by its residents from the factor services rendered to the factor unit within and outside the geographical boundaries of the country.





It refers to the total value of final goods and services produced in a country in a particular period of time usually a year .











Factor of Production -





There are four factors of production . These are :

Land

Labour

Capital

Entrepreneurship









Factor incomes refer to to the incomes derived by those factors who provide factor service to the production unit .





The factor payment to land is called rent.





The factor payment to labour is called wage .





The factor payment to capital is called interest .





The factor payment to entrepreneur is called profit .











Some Basic Terms -





GDP-





Gross Domestic Product





It shows how much goods and services produced within the boundary of the country by both the citizens and foreigners.





GNP-





Gross National Product





GNP is the total value of the total output for the production of final goods and services produced by the national of a country during a given period of time usually a year .





GNP= C+I+G+(X-M)

Here



C- Consumption expenditure of household

I- Investment expenditure

G- Govt expenditure

X- Export

M- Import







NNP-

Net National Product - if you deduct depreciation from GNP , you can have NNP.





NNP= GNP- Depreciation





NNP at factor cost = NNP at Market Price - indirect taxes + Subsidies



NNP at factor is the national income .

The National Income in India is calculated by the Central Statistical Organization under the Ministry of Statistics and Programme Implementation .























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