Tiêu đề Unit 7 - National Income - Applied Economics.pdf ✅

www.ckundan.com.np 1 Unit VII: National Income - Applied Economics Introduction to National Income: National income is the sum of the income of all individuals in a certain period of time or one fiscal year. Individuals income mainly defines as the money value of his/her earning from productive activities, currently rendering by his /her properties. This definition links income to production. Thus the national income is the money value of goods or services produced in an economy in a period of time. According to Marshall, “The labor and capital of a country acting upon its natural resources, produce annually a certain net aggregate of commodities, material an immaterial, including services of all kinds. This is the true net annual income or revenue of a country or the national dividend.” According to Pigou, “National dividend is that part of the objective income of the community including, of course, income derived from abroad, which can be measured in money.” According to Fisher, “The national income consists solely of services as received by ultimate consumers, whether from their material or from their human environment.” According to Simon Kuznet, “National income is the net output of commodities and services flowing during the year from the country's productive system in the hand of the ultimate consumers.” National Income Accounting: It is a record or account of the production of goods and services with their monetized values within a given period of time generally a year. So national income accounting is a
www.ckundan.com.np 2 system where we measure the total final goods and services and their monetary values in a year. Various Concepts of National Income Accounting: 1. Gross Domestic Product (GDP): GDP is the total monetary value of all the final goods and services produced within a country in a specific period of time generally one year. So in GDP, we include only: a. The final goods and services and we don’t include intermediate goods and services. b. Their monetary value and goods and services. c. The goods and services produced within the country and it has not cared whoever is producing either the producer is a citizen of the country or not. d. The goods and services within the specified time and we don’t count the goods and services that are produced in previous years. By Using Expenditure Form, It Can Be Shown As: GDP = C + I + G + (X - M) Where, C = consumption expenditure I = Investment expenditure G = Government expenditure X = Total export earnings M = Total import expenses and X - M = Net income from abroad.
www.ckundan.com.np 3 2. Gross National Product (GNP): GNP is the monetary value of all the final goods and services produced by all the factors of production of a nation within a country or abroad in a given period of time generally one year. So to calculate GNP, we add the total factor income earn from foreign countries by the domestic citizen and subtract the total factor income earned by the foreigner in the country to GDP. GNP = GDP + NIFA Where, NFIA = Net factor income from abroad, or NFIA = Total income received by a domestic factor of production from abroad – total income is taken by the foreign factor of production from the country. 3. Net National Product (NNP): In the production process, a certain amount of fixed capital is used up. This is called depreciation of fixed capital or capital consumption allowances (CCA). By deducting the
www.ckundan.com.np 4 value of depreciation from the value of GNP in a year, we get another measure of output called Net National Product. Hence, NNP = GNP - CCA (depreciation) 4. National Income (NI): National income is the aggregate income of all the factors of production within the country in one year. The amount earned by the factors of production such as land, labor, capital and organization for a period of one year is known as national income. So, national income can be given as: NI = R + W + I + P Where, R = Aggregate Rent W = Aggregate Wage I = Aggregate Interest Income P = Aggregate Profit In other words, national income can be expressed as, NI= NNP - Indirect taxes + subsidies