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Concepts of National Accounts

Macroeconomics deals with the overall functioning of an economy, focusing on aggregate measures like national income, total output, and overall economic performance. One key area in macroeconomics is the study and measurement of national accounts.

National accounts represent the system used to measure a country’s economic activity over a specific period.

  • These accounts include key indicators like GDP, GNP, NI, PDI, and per capita income to provide insights into the economy’s health and development.
  • Gross Domestic Product (GDP)
  • Net Domestic Product (NDP)
  • Gross National Product (GNP)
  • Net National Product (NNP)
  • National Income (NI)
  • Personal Income (PI)
  • Personal Disposable Income (PDI)/Disposal Income (DI)
  • Per Capita Income (PCI)

1.) Gross Domestic Product (GDP)

GDP is the total market value of all final goods and services produced within a country in a specific time period.

  • In order to calculate the value of GDP, all goods and services produced are multiplied by their respective prices and summed up.

2.) Net Domestic Product (NDP)

NNP is the total market value of all final goods and services produced by a country (GNP), minus depreciation.

  • In other words, GDP minus depreciation is called NDP.

3.) Gross National Product (GNP)

GNP is the total market value of all goods and services produced by a country in a year plus net factor income from abroad.

  • In other words, GNP is equal to GDP plus net factor income from abroad.

4.) Net National Product (NNP)

NNP is the total market value of all goods and services produced by a country (GNP), minus depreciation.

5.) National Income (NI)

NI is the total income earned by a country’s residents from production activities.

  • NI reflects the earnings from wages, rents, profits, and interest.

6.) Personal Income (PI)

The total income received by all individuals and household of a country from all possible sources before payment of direct taxes is called Personal Income.

7.) Personal Disposable Income (PDI)/Disposal Income (DI)

The total income received by all individuals and household of a country from all possible sources after payment of direct taxes is called Personal Disposable Income.

  • It is calculated by subtracting direct taxes from personal income.

8.) Per Capita Income (PCI)

Per capita income is the average income per person in a country in a particular year, calculated by dividing the national income by the total population.

  • It indicates the standard of living in a country.

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