Description
The PPT describes topics like GDP GNP, value added VA method, national income accounting, NDP, NNP and methods of measuring GDP
National Income Accounting Concepts and Measurement of National Income
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The value of all final goods and services produced within the economy in the current year Caution: Double Counting Solution: Value Added (VA) Method (Value of Output-Cost of Intermediate inputs)
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Gross Domestic Product (GDP)
Coal=0.7 (Initial Value) M I N Es Iron=1.9 (Initial Value) Mill (Steel)=2.9 Mill=2.9 VA=2.9VA=2.9(0.7+1.9=2.6 (0.7+1.9=2.6)=0.3 )=0.3 Plant(Auto)=3.2 Plant(Auto)=3.2 VA=3.2VA=3.2(0.7+1.9+0.3=2.9 (0.7+1.9+0.3=2.9)=0.3 )=0.3
Dealer=3.4 Dealer=3.4 VA=3.4VA=3.4(0.7+1.9+0.3+0.3=3. (0.7+1.9+0.3+0. 2)=0.2 3=3.2)=0.2
VA Method… An Example…
Buyer=Final price=3.4 Buyer=Final price=3.4 GDP=TVA=0.7+1.9+0.3+0.3+0.2)=3.4 GDP=TVA=0.7+1.9+0.3+0.3+ 0.2)=3.4
Transactions of commodities not produced in the current year are excluded, e.g. Purchase or Sale of the existing houses ? Income generated from the existing assets are included, e.g. Rent from the existing houses ? Transfer Payments are excluded, e.g. Pocket Money, Pensions etc.. National Income Accounting, ? Unpaid Services are excluded Some Conceptual Issues……….. ? Illegal transactions are not considered
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GNP is the value of final goods and services produced in the current period by domestically-owned factors of Production at home or abroad, e.g., Salary of an Indian Professor working in UK is included in the GNP of India ? GDP is the value of all final goods and services produced within the economy in the current year, e.g., Salary of an Indian Gross Domestic Product is included in the Professor working in UK (GDP) and GDP of UK Gross National Product (GNP) Earning from ? Thus: GNP= GDP + Net Factor Abroad
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Depreciation: Part of the capital stock that wears out in the process of Production (hence not available for current consumption) NDP=GDP-Depreciation
Net Domestic Product (NDP) and ? NNP=GNP-Depreciation Net National Product (NNP)
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Real GNP and Real GDP (Calculated at constant Prices, i.e., prices of the base year) An Example:
Goods Apple Orange Pen Current Quantities 8 4 10 Current Year Price 6 3 2 Base Year Price 4 7 5
Current GDP=8*6+4*3+10*2=80
GDP Deflator: (Current GDP/Real GDP)*100 ? Per Capita GDP=GDP/Total Population Some more concepts of National ? GDP at Factor Cost=GDP-(indirect taxes-subsidies) Income Formation: New Capital ? Gross Capital Produced+Addition to the existing Capital Stock
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Real GDP=8*4+4*7+10*5=110
Product Method: VA by all the Production Units are summed up to arrive at the Value of Final Production ? Income Method: Income of all Factors of Production are summed up ? Expenditure Method: Assumes that the value of Sales is equal to the Expenditure of the Buyers
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Methods of Measuring GDP
doc_540274670.ppt
The PPT describes topics like GDP GNP, value added VA method, national income accounting, NDP, NNP and methods of measuring GDP
National Income Accounting Concepts and Measurement of National Income
?
The value of all final goods and services produced within the economy in the current year Caution: Double Counting Solution: Value Added (VA) Method (Value of Output-Cost of Intermediate inputs)
? ?
Gross Domestic Product (GDP)
Coal=0.7 (Initial Value) M I N Es Iron=1.9 (Initial Value) Mill (Steel)=2.9 Mill=2.9 VA=2.9VA=2.9(0.7+1.9=2.6 (0.7+1.9=2.6)=0.3 )=0.3 Plant(Auto)=3.2 Plant(Auto)=3.2 VA=3.2VA=3.2(0.7+1.9+0.3=2.9 (0.7+1.9+0.3=2.9)=0.3 )=0.3
Dealer=3.4 Dealer=3.4 VA=3.4VA=3.4(0.7+1.9+0.3+0.3=3. (0.7+1.9+0.3+0. 2)=0.2 3=3.2)=0.2
VA Method… An Example…
Buyer=Final price=3.4 Buyer=Final price=3.4 GDP=TVA=0.7+1.9+0.3+0.3+0.2)=3.4 GDP=TVA=0.7+1.9+0.3+0.3+ 0.2)=3.4
Transactions of commodities not produced in the current year are excluded, e.g. Purchase or Sale of the existing houses ? Income generated from the existing assets are included, e.g. Rent from the existing houses ? Transfer Payments are excluded, e.g. Pocket Money, Pensions etc.. National Income Accounting, ? Unpaid Services are excluded Some Conceptual Issues……….. ? Illegal transactions are not considered
?
GNP is the value of final goods and services produced in the current period by domestically-owned factors of Production at home or abroad, e.g., Salary of an Indian Professor working in UK is included in the GNP of India ? GDP is the value of all final goods and services produced within the economy in the current year, e.g., Salary of an Indian Gross Domestic Product is included in the Professor working in UK (GDP) and GDP of UK Gross National Product (GNP) Earning from ? Thus: GNP= GDP + Net Factor Abroad
?
?
Depreciation: Part of the capital stock that wears out in the process of Production (hence not available for current consumption) NDP=GDP-Depreciation
Net Domestic Product (NDP) and ? NNP=GNP-Depreciation Net National Product (NNP)
?
? ?
Real GNP and Real GDP (Calculated at constant Prices, i.e., prices of the base year) An Example:
Goods Apple Orange Pen Current Quantities 8 4 10 Current Year Price 6 3 2 Base Year Price 4 7 5
Current GDP=8*6+4*3+10*2=80
GDP Deflator: (Current GDP/Real GDP)*100 ? Per Capita GDP=GDP/Total Population Some more concepts of National ? GDP at Factor Cost=GDP-(indirect taxes-subsidies) Income Formation: New Capital ? Gross Capital Produced+Addition to the existing Capital Stock
?
Real GDP=8*4+4*7+10*5=110
Product Method: VA by all the Production Units are summed up to arrive at the Value of Final Production ? Income Method: Income of all Factors of Production are summed up ? Expenditure Method: Assumes that the value of Sales is equal to the Expenditure of the Buyers
?
Methods of Measuring GDP
doc_540274670.ppt