12 Questions
What is the difference between Gross and Net?
Gross includes depreciation while Net excludes it
Which of the following is a synonym for depreciation as mentioned in the text?
Consumption of fixed capital
What is the definition of National Income?
Net money value of all final goods and services produced by residents of a country in a year
What is included in National Income but excluded from Domestic Income?
Net Factor Income from abroad
How is Gross calculated in relation to Net and Depreciation?
$\text{Gross} = \text{Net} + \text{Depreciation}$
Which income includes the total factor incomes earned within the domestic territory of a country?
Domestic Income
What does NFIA stand for in the given text?
Net Factor Income to Abroad
What is the formula to calculate NFIA when income paid to abroad is given?
NFIA = Income paid to abroad - Income from Abroad
What does Market Price (MP) refer to in the text?
The price at which products are sold in the market
What is the formula for calculating Net Indirect Taxes (NIT) in relation to Market Price (MP) and Factor Cost (FC)?
NIT = IT - Subsidies
In Case IV, when Net Factor Income to Abroad (NFPA) is positive, what is the relation between income to abroad and income from abroad?
Income to abroad > Income from abroad
What are Indirect Taxes in the context of the text?
Taxes levied on goods and services during production and sale
Study Notes
Gross and Net
- Gross refers to the total value before deductions or adjustments.
- Net refers to the value after deductions or adjustments.
Depreciation
- Amortization is a synonym for depreciation.
National Income
- National Income is the total income earned by citizens of a country, whether within the country or abroad.
- It includes income earned by citizens abroad, but excludes income earned by foreigners within the country.
National Income vs. Domestic Income
- National Income includes income earned by citizens abroad, but Domestic Income excludes it.
Gross and Net Calculation
- Gross = Net + Depreciation
Income Types
- Domestic Income includes the total factor incomes earned within the domestic territory of a country.
- National Income includes income earned by citizens abroad.
NFIA
- NFIA stands for Net Factor Income from Abroad.
- NFIA = Income earned by citizens abroad - Income paid to abroad
Market Price and Net Indirect Taxes
- Market Price (MP) refers to the price of a good or service at which it is sold.
- Net Indirect Taxes (NIT) = MP - FC (Factor Cost)
- NIT represents the difference between the market price and the factor cost.
Net Factor Income to Abroad (NFPA)
- When NFPA is positive, income earned from abroad is greater than income paid to abroad.
Indirect Taxes
- Indirect Taxes are taxes levied on goods and services, such as sales tax or value-added tax (VAT).
Learn how to calculate national income using different methods like income, expenditure, and value added method in this numerical based chapter. Understand how to determine private income, personal income, personal disposable income, National disposable income (net and gross) along with their differences. Explore the concepts of gross and net values in economic calculations.
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