Answer to Question #136412 in Microeconomics for Alax

Question

Explain main components of national income.

Answer 1

National Income. It's includes all goods and services produced in a country within some period.

Components of national income include the following.

1)Gross domestic income (GDP)

GDP is the monetary worth of goods and services produced in a country for some period for instance the period may be one year.

GDP = C+I+G+(X-M)

Whereby,

C=Consumption

I=Investment

G=Government expenditure

(X-M) =Export minus import

2. Net Domestic Product (NDP).

This is the GDP minus depreciation. Depreciation is the loss in value of the things like machines which are used produce of goods and services.

NDP = GDP - Depreciation

3.Gross National Product (GNP)

Is monetary worth of goods and services produced by the citizens of the country within the country as well as abroad within some period like one year

GNP=GDP+NFIA 

Where,

NFIA = Net factor income from abroad

4. Net National Product (NNP)

It's is the GNP minus depreciation.

This focuses on the loss in value of the capital used in the production of goods. For instance machines value going down.

NNP=GNP-Depreciation

5. Per Capita Income.

This is the average income per head per year in a given country.

We get per capita income by dividing national income with total population of the country