Concept of National Income – It’s Meaning, definition Nature, definition and important concepts and Methods of Natioal Income - Learn Economics free online

Concept of National Income – It’s Meaning, definition Nature, definition and important concepts and Methods of Natioal Income - Learn Economics free online


Overview – Meaning and concept of national income in economics, Difference between national wealth and national income, important concepts and types (Classification of national income), Methods of Measuring national income, What is GDP, GNP, NNP, Personal income and disposable income


Concept of National Income
What does National Income means?
Meaning of National Income: National income is the measurement of flow of services and goods in economic system. The national wealth is the measurement of present assets available on a given time while the National income is the measurement of the production of economic system in a given time period.
The figures of National income are based on the financial year (i.e. from 1st April to 31st March). The base of one year is taken for calculating National income which is called base year, as all the seasons come in a year. The data of estimation of India’s National income are issued by Central Statistical Organization (CSO)
The important concepts of national income are:
Methods of Measuring National Income -
There are various means and methods through which national income can be measured. These methods of measuring national income are:
1.    Gross Domestic Product (GDP)
2.    Gross National Product (GNP)
3.    Net National Product (NNP) at Market Prices
4.    Net National Product (NNP) at Factor Cost or National Income
5.    Personal Income
6.    Disposable Income

Define Gross Domestic Product (GDP), Gross National Product (GNP), Net National Product (NNP) at Market Prices, Net National Product (NNP) at Factor Cost or National Income, Personal Income and Disposable Income?
1.    Meaning and definition of Gross Domestic Product (GDP): GDP is the total market value of all final goods and services currently produced within the domestic territory of a country in a year.
2.    Meaning and definition of Gross National Product (GNP): Gross National Product is the total market value of all final good and services produced in a year. GNP includes net factor income from abroad whereas GDP does not.
3.    Meaning and definition of Net National Product (NNP) at Market Price: NNP is the market value of all final goods and services after providing for depreciation. That is, when charges for depreciation are deducted from the GNP we get NNP at market Price.
4.    Meaning and definition of Net national product (NNP) at factor cost (national income): NNP at factor cost or national income is the sum of wages, rent, interest and profits paid to factors for their contribution to the production of goods and services in a year.
5.    Meaning and definition of Personal Income: Personal income is the sum of all incomes actually received b all individuals or households during a given year.
6.    Meaning and definition of Disposable Income: From personal income if we deduct personal taxes like income taxes, personal property taxes etc. What remains ins called disposable income
Disposable income = consumption + saving



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