# Economics - National Income

2400 Words10 Pages
ECONOMICS

TITLE : NATIONAL INCOME

TEAM MEMBERS : SARAH CHIN, ARDEN, NURUL NADYRAH & FIR DAUS

LECTURER : MR.MANO
TABLE OF CONTENT

1. INTRODUCTION TO NATIONAL INCOME 3, 4
2. BACKGROUND OF NATIONAL INCOME 5, 6
3. THE MEASUREMENT OF NATIONAL INCOME 7, 8

4. THE PROBLEMS IN MEASURING NATIONAL INCOME 9,

5. PROBLEMS OF COMPARISON OF NATIONAL INCOME BETWEEN 10
COUNTRIES

6. CONCLUSION 11

7. REFERENCES 12

INTRODUCTION
National Income or national product or national expenditure is the total value of all goods or services produced or created by a nation
Therefore GNP, rather than NNP, is used to make comparisons over time and between countries.

Net National Product
Net national product (NNP) is obtained when the value of depreciation is subtracted from the GNP. Depreciation occurs when capital equipment use in the production process becomes obsolete after a certain period of usage.
NNP = GNP – depreciation

NNP can also be measured at market prices or at factor prices. The formula to calculate NNP at market price is:
NNP (market price) = GNP (market price) – depreciation
&
NNP (market price) = NNP (factor cost) + indirect taxes – subsidies

The formula to calculate NNP at factor cost is:
NNP (factor cost) = GNP (factor cost) – depreciation
&
NNP (factor cost) = NNP (market price) + subsidies – indirect taxes
BACKGROUND OF NATIONAL INCOME
National income is gross domestic income for the country. The gross domestic product (GDP) or gross domestic income (GDI) is one of the measures of national income and output. GDP can be defined in three ways, which should give identical results. First, it is equal to the total expenditures for final goods and services produced within the country in a specified period of time (usually a 365-day year). Second, it is equal to the sum of the value added at every stage of production by all the industries, plus taxes and minus subsidies on products. Third, it is equal to the sum of the income generated by