National Income: NNP at Factor Cost

National Income is the total income earned by the factors of production in a country over a period of time. It includes the income earned by individuals, firms, and the government. The National Income of a country can be calculated using different methods, such as the product, income, and expenditure methods.

NNP at factor cost is the most appropriate measure of National Income. It is calculated by deducting the depreciation of capital goods from the Gross National Product (GNP) at factor cost. This is because depreciation is the wear and tear of capital goods used in the production process, and it needs to be deducted to arrive at the actual income earned by the factors of production.

GDP at Factor Cost

Gross Domestic Product (GDP) at factor cost is the total value of all goods and services produced within the domestic territory of a country during a specific period, after deducting the value of intermediate goods and services. GDP at factor cost includes the income earned by all factors of production, such as labor, capital, and land.

NDP at Factor Cost

Net Domestic Product (NDP) at factor cost is the GDP at factor cost minus depreciation. It is the value of all final goods and services produced within the domestic territory of a country during a specific period, after deducting the value of intermediate goods and services and the depreciation of capital goods.

NNP at Market Price

Net National Product (NNP) at market price is the NNP at factor cost plus indirect taxes minus subsidies. It includes the income earned by the factors of production and also takes into account the impact of indirect taxes and subsidies.

Conclusion

In conclusion, the correct measure of National Income is NNP at factor cost, as it deducts the depreciation of capital goods, which is necessary to arrive at the actual income earned by the factors of production. GDP at factor cost and NDP at factor cost are important measures of income, but they do not take into account the impact of depreciation. NNP at market price includes the impact of indirect taxes and subsidies, which are not part of the actual income earned by the factors of production.

Well NNP at FC is a national concept and is known as national income... It is bcz it refers to the net money value of all the final goods and services produced by the normal residents of a country during a period of one year..