National income - notes - Class 12 PDF Download

NATIONAL INCOME 

National income is broadly defined as the aggregate monetary value of all the goods and services produced in a country during year. This definition gives his four features of national income .These are:

 @National income is counted for a period of one accounting year. The accounting year in India is April 12 to March 31st. @National income is a flow concept means national income is a measure of flow of goods and services during year.

@ We include both final and services in the calculation of national income . It implies that intermediate goods are not included in the calculation of national income .

@National income is always expressed in terms of monetary value of goods and services.

DISTINCTION BETWEEN DOMESTIC AND NATIONAL PRODUCT. 

@ Domestic product is the sum of value added Together by all the producers in the domestic Territory of a country during a year

    National product is the sum of value added Together by the normal residents of a country whether within the domestic Territory or outside the domestic territory.

@ Since domestic product is defined with reference to domestic teritory it is known as territorial concept and

      National product is known as economic concept because it is defined with reference to protect your efforts of normal resident

@ The difference between domestic product and national product is equal to net factor income from abroad hence we add the net factor income from abroad to the domestic product it becomes the national product.Thus,

 National product = Domestic Product + Net factor income from abroad.

Net Factor Income from Abroad 

   Net Factor income from abroad is the difference between the income earned from abroad for rendering factor services by the normal residents of the country and income paid for the factor services rendered by non residents in the domestic Territory of a country.

Net Exports 

              It refers to the difference between exports and imports of goods and services it is a domestic service it includes non factor services.

INDIRECT TAX 

          Indirect Taxes are those where the liability to pay and burden of tax falls on two different persons . Indirect tax increases the market price of a product.

SUBSIDIES 

          Subsidies are the payments made by the government to firm in form of relaxation.. Subsidies reduce the market price of a product. 

Indirect tax -Subsidy = Net Indirect Tax.