2. WHAT IS NATIONAL INCOME?
National income is the final outcome of
all economic activities of a nation
valued in terms of money.
The sum total of the values of all goods
and services produced in a year.
It is the money value of the flow of
goods and services available in an
economy in a year.

3. Cont….
National Income Committee of India
(1951) defines National Income as
follows:
“ A national income estimate
measures the volume of
commodities and services turned
out during a given period counted
without duplication.”
Thus, National income is the aggregation of wages, rent, interest
and profit or is the total of rewards to be given to the factors of
production for any certain period.

4. CONCEPTS OF NATIONAL INCOME
Gross Domestic Product- GDP
Gross National Product- GNP
Net National Product-NNP
Personal Income- PI
Disposable Personal Income-DPI
Per Capita Income-PCI

5. Gross Domestic Product - GDP
 Gross domestic product (GDP) is a measure
of the income and expenditures of an
economy.
 It is the total market value of all final goods
and services produced within a country in a
given period of time.
 It includes both tangible goods (food,
clothing, cars) and intangible services
(haircuts, housecleaning, doctor visits).

6. Gross National Product - GNP
Gross national product (GNP) is the total
income earned by a nation’s permanent
residents (called nationals).
It differs from GDP by including income
that our citizens earn abroad and excluding
income that foreigners earn here.
GNP=GDP+X-M

7. Net National Product - NNP
 Net National Product (NNP) is the
total income of the nation’s
residents (GNP) minus losses from
depreciation.
NNP=GNP-Depreciation

8. Personal Income - PI
 Income earned by all the individuals and
institutions during a year in a country. The
entire national income does not reach
individuals and institutions. A part of it goes
by way of corporate taxes .
 PI = National Income –(Corporate taxes,
undistributed profits, social security
contributions) + Transfer Payments.

9. Disposable Personal Income - DPI
 Disposable personal income is the income that
household and non corporate businesses have left
after satisfying all their obligations to the
government.
 Disposable personal income = Personal Income -
Direct Taxes
Per capita Income - PCI
 If the national income is divided by the total
population we get the per capita income.

10. National Income = C + I + G + (X – M)
where C = Consumption, I =
Investment, G = Government and X
is Export and M is Import.