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Types of National Incomes (NDP (NDP=GDP-DEPRECIATION, This is basically,…
Types of National Incomes
GDP
It is the value of all
final
goods & Services produced within the boundary of a nation during one year period
It is a
quantitative
concept & its volume/size indicates the internal strength of the economy. But it does not say anything about the qualitative aspects of the produced goos and services
It is used by the WB/IMF
NDP
NDP=GDP-DEPRECIATION
This is basically,
net form of the GDP
NDP of an economy has to be always lower than its GDP for the same year
It is used for domestic purpose only to understand the historical situations of the loss due to depreciation to the economy
To show the achievements of the economy in the area of research and development
It is not used for comparing the economies of the world thus is due to the different rates of depreciation which is set by the different economies of the world
GNP
It is the GDP of a country added with its
income from abroad
GNP=GDP + INCOME FROM ABROAD
India's GNP is
always lower than its GDP
This is
national income
according to which the IMF ranks the nations of the world in terms of the volumes at PPP
India is
4th largest
economy of the world after USA, China, and Japan
It is the more exhaustive concept of National income than the GDP as it indicates towards the
quantitative as well as qualitative
aspects of the economy, i.e. Internal as well as external strength of the economy
NNP
It is the GNP after deducing the loss due to the
depreciation
NDP =GNP - DEPRECIATION
OR
NNP = GDP + INCOME FROM ABROAD - DEPRECIATION
This is the
national income (NI)
of an economy
This is the purest form of the income of a nation
When we divide NNP by the total population of a nation we get the
per capita income (PCI)
of that nation
Higher the rate of depreciation, lower the PCI of the nation