Explain the concept of national income. Differentiate between GDP and Gross National Product (GNP). 10
Answer in English and Nepali Medium
Answer:
The concepts of national income:
A) Gross Domestic Product (GDP:
Gross Domestic Product (GDP) is the total market value of all goods and services produced within a year in a country. The formula can be presented as follows.
Gross domestic product:=P1Q1+ P2Q2+ P3Q3+…………. PnQn
B) Net Domestic Product (NDP)
NDP is obtained by deducting the depreciation fromGDP.
C) Gross National Product (GNP)
This is the result of adding net income from abroad to the gross domestic product (GDP).
D) Net National Product (NNP)
The price obtained by subtracting depreciation from the total market price of all goods and services produced in a year.
E) National Income (NI)
National income is the sum of the total income earned by the means of production in a year and the net income earned from abroad.
F) Personal Income (PI)
Personal income is the sum of the total income received by various individuals and households of the country from various sources. This includes the income before the household pays direct taxes.
G) Disposable Income (DI)
The total income received by various individuals and households of the country from various sources is the sum of direct income after direct tax.
H) Per Capita Income (PCI)
The per capita income is the quotient of one year’s national income divided by the population of that year.
Difference between Gross Domestic Product (GDP) and Gross National Product (GNP)
| Gross Domestic Product (GDP) | Gross National Product (GNP) |
| 1.The total market value of all goods and services produced in a year within the borders of the country. | 1. This is the result of adding net income from abroad to the gross domestic product (GDP).
|
| 2. This doesn’t include net income from abroad. | 2.This includes net income from abroad. |
| 3. Narrow concept. | 3. Detailed concept |
| 4. Geographical concept. | 4. Geographical concept. |
Answer in Nepali Medium:
