The actual demand by person in an economy is determined by GNP NNP Nat...
Introduction
The actual demand by individuals in an economy is influenced by various economic factors such as GNP (Gross National Product), NNP (Net National Product), national income, and personal disposable income. These factors play a crucial role in determining the purchasing power and consumption patterns of individuals within an economy.
GNP and Actual Demand
GNP represents the total value of goods and services produced by the residents of a country, both domestically and abroad, within a specific time period. It includes consumption, investment, government spending, and net exports. GNP is an important indicator of the overall economic activity in a country. When GNP increases, it indicates a growing economy, leading to higher incomes and increased consumer spending. This, in turn, drives up the actual demand by individuals as they have more disposable income to spend on goods and services.
NNP and Actual Demand
NNP, on the other hand, represents the total value of goods and services produced by the residents of a country after deducting depreciation and indirect taxes. NNP provides a more accurate measure of the income available for consumption. As NNP increases, individuals have more disposable income, and this leads to an increase in their actual demand for goods and services.
National Income and Actual Demand
National income refers to the total income earned by individuals in the country, including wages, salaries, profits, and rent. It represents the overall earning capacity of the population. National income is an important factor influencing actual demand as it determines the purchasing power of individuals. When national income increases, individuals have higher incomes, resulting in increased actual demand for various products and services.
Personal Disposable Income and Actual Demand
Personal disposable income represents the income available to individuals after deducting taxes and other mandatory deductions. It is the income that individuals have at their disposal to spend on goods and services. Personal disposable income directly impacts actual demand as individuals can only spend according to their disposable income. When personal disposable income increases, individuals have more money to spend, leading to an increase in their actual demand.
Conclusion
In conclusion, the actual demand by individuals in an economy is determined by various factors such as GNP, NNP, national income, and personal disposable income. These factors influence the purchasing power and consumption patterns of individuals. When these economic indicators increase, individuals have more disposable income, resulting in higher actual demand for goods and services. Understanding these factors is essential for policymakers and businesses to analyze and forecast consumer behavior and make informed decisions.
The actual demand by person in an economy is determined by GNP NNP Nat...
National income
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