Business Economics
Part 2
By - Jasmeet Sir
, Topic : MEANING OF NATIONAL INCOME
National Income Accounting, pioneered by the Nobel prize-winning economist
Kuznets and Richard Stone, is the system of macro-economic accounts from th
of production of goods and services to the stage of their final disposal.
National Income is defined as the net value of all economic goods and
produced within the domestic territory of a country in an accounting year plus
factor income from abroad.
, Topic : USEFULNESS AND SIGNIFICANCE OF NATIONAL INCOME
ESTIMATES
• Framework for analyzing and evaluating the short-run performanc
economy
• Pattern of demand for goods and services
• Economic welfare
• Quantitative basis for assessing and choosing economic policies
• Throw light on income distribution
• Assist in determining eligibility for loans etc.
• A guide to make policies for growth and inflation
• Forecasting about the future development trends of the economy
, Topic : DIFFERENT CONCEPTS OF NATIONAL INCOME
1. Gross vs Net
Gross N
(-) Depreciation
2. Domestic Product vs National Product
Domestic Nationa
+ Net Factor Income From Abroad
Or - Net Factor Income TO Abroad
, Topic : DIFFERENT CONCEPTS OF NATIONAL INCOME
3. Market Price Vs Factor Cost
Market Price Factor C
}
+ Indirect Taxes
(-) Net Indirect Tax
- Subsidies
, Topic : Real GDP VS Nominal GDP
Real GDP or GDP At Constant Prices Nominal GDP or GDP At Current Pr
Measurement of Value of Output at the Measurement of Value of Output
Price Level of a selected "Base Year". Price Level of the "Current Year".
National Income is affected only by National Income is affected by cha
changes in Output levels. Price levels and Output levels.
National Income changes only when National Income changes even i
production / physical output changes. change, without any change in pro
/ physical output. .
, Topic : GDP Deflator
It is the ratio of Nominal GDP (at Current Prices) to Real GDP (at Co
Prices)
𝑁𝑜𝑚𝑖𝑛𝑎𝑙 𝐺𝐷𝑃
GDP Deflator = × 100
𝑅𝑒𝑎𝑙 𝐺𝐷𝑃
GDP deflator is the price index used to convert nominal GDP to real G
, Topic : PER CAPITA INCOME
GDP𝐹𝐶 per capita = GDPFC ÷ Population
, Topic : Methods Of Calculating National Income
Method 1: Value Added Method
Particulars Amou
Gross Value Added by Primary Sector
Add: Gross Value Added by Secondary Sector
Add: Gross Value Added by Tertiary Sector
GDPMP
Less: Depreciation
Add: NFIA
Less: Net Indirect Tax
NNPFC
, Topic : Methods Of Calculating National Income
Gross Value Added (GDPMP) = Value Of Output – Intermedi
Consum
Value Of Output = Sales + Change in stock
Part 2
By - Jasmeet Sir
, Topic : MEANING OF NATIONAL INCOME
National Income Accounting, pioneered by the Nobel prize-winning economist
Kuznets and Richard Stone, is the system of macro-economic accounts from th
of production of goods and services to the stage of their final disposal.
National Income is defined as the net value of all economic goods and
produced within the domestic territory of a country in an accounting year plus
factor income from abroad.
, Topic : USEFULNESS AND SIGNIFICANCE OF NATIONAL INCOME
ESTIMATES
• Framework for analyzing and evaluating the short-run performanc
economy
• Pattern of demand for goods and services
• Economic welfare
• Quantitative basis for assessing and choosing economic policies
• Throw light on income distribution
• Assist in determining eligibility for loans etc.
• A guide to make policies for growth and inflation
• Forecasting about the future development trends of the economy
, Topic : DIFFERENT CONCEPTS OF NATIONAL INCOME
1. Gross vs Net
Gross N
(-) Depreciation
2. Domestic Product vs National Product
Domestic Nationa
+ Net Factor Income From Abroad
Or - Net Factor Income TO Abroad
, Topic : DIFFERENT CONCEPTS OF NATIONAL INCOME
3. Market Price Vs Factor Cost
Market Price Factor C
}
+ Indirect Taxes
(-) Net Indirect Tax
- Subsidies
, Topic : Real GDP VS Nominal GDP
Real GDP or GDP At Constant Prices Nominal GDP or GDP At Current Pr
Measurement of Value of Output at the Measurement of Value of Output
Price Level of a selected "Base Year". Price Level of the "Current Year".
National Income is affected only by National Income is affected by cha
changes in Output levels. Price levels and Output levels.
National Income changes only when National Income changes even i
production / physical output changes. change, without any change in pro
/ physical output. .
, Topic : GDP Deflator
It is the ratio of Nominal GDP (at Current Prices) to Real GDP (at Co
Prices)
𝑁𝑜𝑚𝑖𝑛𝑎𝑙 𝐺𝐷𝑃
GDP Deflator = × 100
𝑅𝑒𝑎𝑙 𝐺𝐷𝑃
GDP deflator is the price index used to convert nominal GDP to real G
, Topic : PER CAPITA INCOME
GDP𝐹𝐶 per capita = GDPFC ÷ Population
, Topic : Methods Of Calculating National Income
Method 1: Value Added Method
Particulars Amou
Gross Value Added by Primary Sector
Add: Gross Value Added by Secondary Sector
Add: Gross Value Added by Tertiary Sector
GDPMP
Less: Depreciation
Add: NFIA
Less: Net Indirect Tax
NNPFC
, Topic : Methods Of Calculating National Income
Gross Value Added (GDPMP) = Value Of Output – Intermedi
Consum
Value Of Output = Sales + Change in stock
