This document discusses national income and its measurement. It defines key terms like GDP, GNP, NDP and NNP. It also describes the main methods used to measure national income - the production method, income method and expenditure method. Finally, it lists some important factors that determine a country's level of national income, such as natural resources, labor, capital, organization and social/political structure.

1. By :
Manish D Rangari
National Income

2. Content
 Introduction
 Concept of National Income
 Methods of Measuring National Income
 Factor Determining Level of National
Income

3. Introduction
 National Income is the income of the Country.
 The assessment of money value of all goods and
service provide by a country during a period of
one year.
 It is taken as aggregate of income earned by
individual in Country.
 National Income helps nation to determine what is
the growth of the nation.
 This include the goods and services produce by
the government in the form of Import and Export.
 National income is the total net value of all goods
and services produced within a nation over a

4. Concept of National IncomeGDP
(GROSS DOMESTIC
PRODUCT)
Value of Goods and Services within the
country.
We don’t add income arising from
abroad.
We only take final good production and
exclude the intermediate goods.
NDP
(NET DOMESTIC PRODUCT)
NDP can be simply write as an,
NDP=GDP + Intermediate Goods
GNP
(GROSS NATIONAL
PRODUCT)
GNP can be simply write as an,
GNP=GDP + Income from Abroad
NNP
(NET NATIONAL PRODUCT)
NNP can be explain as Intermediate
goods plus income from abroad
therefore,
NNP=NDP + GNP
Concept of
National Income

5. Methods of Measuring National
Income
PRODUCTION
METHOD
IINCOME
METHOD
Method
of
Measuri
ng
Nationa
l
Income
EXPENDITUR
E
METHOD

6. PRODUCTION METHOD
 This is also known as ‘Value Added Method’.
 National Income is accessible from output side by
this method
 According to this methods, the economy is
divided into different sectors.
 Sectors like agriculture, mining, manufacturing,
small enterprises, transport,etc.
 Then the gross product is found out by “adding up
net values of all the production”.

7. Income Method
 Income method is work as by adding up the
income earned by all Factor of Production.
 This Method approaches national income from
distribution side.
 Measurement of income is done after it has been
distributed and appear as income earned or
received by individual of the country.
 Thus, according to this method,national income is
obtained by summing up of income of all
individual in the country.
 Income method consist of an Rents, Wages and
Salaries, interest and profit.

8. Expenditure Method
 This method is also known as total outlay
method.
 Computation of national income by this method is
by adding up all the expenditure made on goods
and services during a year.
 Income can be spent either on Consumer goods
or investment goods.
 Thus, national income is received by summing of
all consumption expenditure and investment
expenditure made all individual as well as the
government of a country during a year.

9. Factor Determining Level of National
Income
Natural
Resources
Labour Capital
Organization
Social &
Political
Structure

10. Factor Determining Level of National
Income
 Natural Resources : Countries that are enriched with resources like land
, fertile, soil, neccessary mineral like coal and iron, power resource etc.
 Labour : Labour is required for the production of wealth. The worker
must skilled as well they should be sufficient in number.
 Capital : Efficient production is impossible without state -of –art
machinery and equipment. The national income of under developed
countries is low because lack of capital.
 Organization : Skilled management is mandatory for a high level of
production. Therefore, skilled leadership is available for industrial
organisation in a country having higher level of income.
 Social & Political Structure : The political structure of a country is also
important from the view point of efficient production. Strick execution of
law and order, and a incorruptible administration are factor
whichpromote economic development and obtain a high level of national
income.