Measuring national income and output

Concepts in national income

 1)National Income:

    Total market value of all final goods and services produced by a country during one year or total payments received by the factor of productions though the production of goods and services in a country in a year.

  

  2)Gross Domestic Product(GDP):

     Total market value of all final goods and services produced within a country in a given time period.It excludes goods and services produced by citizens working overseas.For example,GDP in Malaysia include total market value of all final products produced in Malaysia over period of one year and excludes the final product produced by Malaysians working overseas.

  3)Gross National Product(GNP):

     Total market value of all final goods and services produced by the citizens of a country over a period of one year.Other meaning for GNP is the total income earned by citizen regardless of where they are.Example,income earned by Malaysians who are working abroad will be included in the GNP.However,the income earned by foreign workers working in Malaysia will not be included in the GNP.

  4)Market Price(MP) and Factor Cost(FC): 

     GDP can be measured at market price and also at factor cost:

• Market Price refers to the current price in the market through the forces of demand and supply.Market Price is the actual prices paid by consumers.It includes indirect taxes and excludes subsidies given to producers.
• Factors Price is the real price that is earned by producers or sellers.The difference between GDP at Market Price(GDPmp) and GDP at Factor Cost(GDPfc) are due to indirect taxes and subsidies. 

       ➤indirect taxes are taxes levied on goods and services such as excise duty,import duty and sales tax.It also known as taxes on expenditure or consumption tax.
       ➤ subsidies is an incentive from the government to encourage producers to produce more.