NNPFC= NNPMP- NIT: Understanding the Equation

NNPFC stands for Net National Product at Factor Cost while NNPMP stands for Net National Product at Market Price. NIT refers to net indirect taxes. The equation NNPFC= NNPMP- NIT is an important concept in national income accounting. Here is a detailed explanation of each term in the equation:

NNPFC (Net National Product at Factor Cost)

- It is the total value of goods and services produced by a country's citizens or companies in a given period.
- NNPFC is calculated by subtracting the depreciation of fixed capital from the Gross National Product (GNP).
- It is also called the national income.

NNPMP (Net National Product at Market Price)

- It is the total value of goods and services produced in a country in a given period.
- NNPMP is calculated by adding indirect taxes and subtracting subsidies from NNPFC.
- It is also called the national expenditure.

NIT (Net Indirect Taxes)

- It is the difference between indirect taxes collected by the government and subsidies provided by the government.
- NIT is subtracted from NNPMP to arrive at NNPFC.

Therefore, the equation NNPFC= NNPMP- NIT shows the relationship between the net national product at factor cost and the net national product at market price. It explains how indirect taxes and subsidies affect the national income of a country. By subtracting the net indirect taxes from NNPMP, we arrive at NNPFC, which is the actual income earned by the citizens or companies of a country.