Here are we are providing you with NATIONAL INCOME – GDP, NDP, GNP, NNP DEFINITIONS. These notes are important for all the competitive exams like IBPS PO, IBPS RRB, IBPS RRB, RBI, SBI, and all other banking exam.

national income GDP, NDP, GNP, NNP DEFINITIONS

What is National Income? Definitions of GDP, NDP, GNP, NNP

The total value of all goods and services created within a nation over a particular period of time, symbolizing the sum of wages, profits, rents, interest, and pension payments to residents of the nation. In other words, the total amount of income amassing to a country from economic activities yearly is known as National Income. There are different methods to calculate income of a nation that are as follows:-

 1.Gross Domestic Product(GDP)

 2.Net Domestic Product(NDP)

 3.Gross National Product(GNP)

 4.Net National Product(NNP)

Gross domestic product-

GDP is the primary tool used by economists to measure a nation’s productivity/income/expenditure. The country’s overall value produced of goods and services at market prices, excluding net income from abroad, is the gross domestic product. GDP is calculated annually but it can also be calculated quarterly. For the most part, it is articulated as a comparison to the previous year.The value of GDP shows that the economy has grown by that value over the last year. GDP exclude the income of the people living outside of that country but includes the income of people of other countries living there.

Net Domestic Product-

Net domestic product detailed for capital that has been used up over the year in the form of housing, vehicle, or machinery declination. The depreciation detailed for is often referred to as “capital consumption allowance” and represents the amount of capital that would be needed to put in place of those depreciated assets.

NDP = Gross Domestic Product – Depreciation

Gross National Product-

It is the products and services produced in one year by labor and property supplied by the citizens of a country. It assigns production based on the location of ownership. When we calculate gross national product, the income of foreigners in a country is excluded but income from the people who are living outside of that country is included. The value of GNP is calculated on the basis of GDP.If a person working in the foreign country sends money to India, it is calculated in GNP. At the same time, if a person belongs to foreign country works in India and earns money, it is excluded.

GNP = GDP + Income from Abroad – Income of Foreigners inside the country

Net National Product-

The total value of goods produced and services provided in a country during one year, after depreciation of capital goods has been allowed for. Depreciation describes the devaluation of fixed capital through wear and tear associated with its use in productive activities.

NNP = GNP – Depreciation

The two major things are acknowledged, while calculating income-

  • Factor Cost
  • Market Price

Factor Cost:- It is the input cost that is also called Production Cost. It includes raw materials cost, salary of the workers, machine cost, and other things.

Market Cost:- It is the showroom price. It includes transportation cost, indirect taxes, the salary of the workers, showroom maintenance cost, and some marginal amount of profit.

NNP at Factor cost = NNP at Market cost – Indirect taxes + Subsidies

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