Date

Natomal
D:
I is the Sum toHal of aclon încames eana
by nomal seaidants o a countu dusing the pei
inlame oly ond incama.of on
the normal residents of a cotntuy.
() FAeTORS INcoME
Snasmes orne broadly clasihed as fockor
acton incane/fuola
pauments and transten incame |ransan paumenté. fae
mcone cre elated to jocta viees o1 faclorcs
peoduckon (lond, labon, capital, enreprenunsh Prolu
seav'es fom
hioe puahase the factanHeeeve the househola
4ments-rom thd
an n olun
produee. Jhese payments are faclon
pafvieo,
pm
these as
and Arom the houehodspsint
alled facton income. faoto, mcame eom be
be clasih

nder compemsahian o amployees

Rent
nlonest
Lacomes
Oe not înoluded becauae tran
Tsoman poymenis)
tlateroal (one sided) ine charitys
pauyments a
gmants.
Normoal Residents Nbn- Residents o nd
Sndian aosUing
foreigh
in
mbaeias n Foneigmess cOSUngy i
nda. Canda amd Japan.
Jos enjloged in tooeigs asKing
 Date

poge

old Jlaalih Osapnisation Wonld Health

nisahion Jooated

Local people coasuuing in he beeman

Monc fud in Srdia o thelobe
TMf in Lnhe

Ambassada fosa Sndiacin

dhe rest a< the cwoald

Jhe froceign technicd

in driao a poia in
am0xe tham one yeat
kess than sne yeah

Natimal TnCame inleudes ineme

normal enidents o a
indudeneone al the nen-reaideats, eNen they
happem to be. the cihieens al

sefersto pauments gt gealos to thoso îin

nade bytha phodueNs Comes ohichae oeaied
bRaushada, bathe
Raleschasiky
Jhese ae, included Jhae a9e mot
DahiÝ nal iacame. ineluded in nalonalinne
Git ,conatn,
inkenesta cheity
 Demesti Sheome:
+faot Jnoome Caned
forom ed o the cncd- faata dnaore by JUnedk
nesidentó in ou domeshic teoutosuy
mon-nesidenS

Domestic nconei
Nahional fncame - Net fachoy income from abood.

DoMESTIC LncoME - DoMESTIe eoDeT

Domeshc Tncome t Net factasA ircomeram abroad ANabis
Domeshie boduct + Nel faoton inesTna fpom alkrrood s Naian

nsos5 & NET ConcEPTS DE DaMEsTIc ToDuCT:

DarsSIC
Domeshic product is measuned as GRDSS DoHESTIC n
(nb NEr DomssrIC RODUCr
Peopuer (NDE)
GDP= NDP+ DepaPeiahon.
GINP = NNP+ Depreciakan
G)aMESTIC TaoDCT at Mauiet taice and foatn Cast
Ohon dome shie. prroduct is estimated as the sum a
totel oe maxkel value al the hinal goods (pro
coi thin the domestic teooitaey of Srdià), getso
hc prodet al maet
Ch the oth hand, cohen dom cshjc product /ineme t9
esinatod os the Sum of total tachs i'nsms (
oHhi dhe domeshc togoitosy
domestt produet at facla Coet.
 Date
Page

Jhoc s mo dioenoe betwcer

domastie prodeot at mayet price amd darnashie
Consi
frodeuot at faclor coo.Ao long
dexng prroduoon seols
Ohouaehald s0okata Rut- the diexem em
ConGide the gowerenment eotar
as cuel. Jhe gavtmposes Aosces on
das) qinds
hich ineeases the rooet priL,(indirect
Land because a subsidy it loers. Jhe tae aqerd,
maryeh pr îce is epimatd bey
hy deduoting îndireot
taces a addig &uhcidies t dhe prediing maxuet
price

DOMEsTIC lNCOME> (NDPFe

J is the sum af toBal af faces încomes (compensa
of employees trent +intecest +proft) gpmenatod usittin.
a countay (no
the domestà tasitasy of qesidents matto
geng9ates it naslmad d, Don-rebidemts)
who
NATTONAL LNeOME>
the sun al total af fackor incames (campensahim
Jt is
ent + întenest +proft earned du
o emplayees
csidends al a countouy (no matteon hed
noma teriloy c
qoneatad cithin the dmeshi
it is
Loutside.

FaerOR INCOME ronalbnoad is fhedifexene

NET încome Qa9ned bl.
betucom factn
temponaly sesidnq akscad and faate
incane Doomedby noneidohts oho ae tempr
in

Tncame: Nahianal Income- NEIA

National Incene Domestic Incane t NEIA
Net Faator lncerme
rom Abscad Naional Sncame - Domesti Jne
 Page

@ a exelude Brom. domestic income that poot ol at

Îrcome wvch belongs to ron esidomto within aun
domestt. lersitoy AND.
we add to domesti incamne. that pat of acas
incame. whch aw. eaidomks. .eon
aoxtd (o prom he domeste oottoies of othen cA

Jhe towo oms ae. idenical -to eoah othen bscamse

groduction. is ulimataly convetted irto fockon inaarne
n the fist ound, the Sn produoe. groda.

aDP (Gaoss Domeshe oduc)-Leprialion = NDP

(NeDomestic
NDP(Net Domesic Boduct) +Dapreàhan= GDe Product)
GDP-ND =Depreciahion

Giren GoP- 22300, Cepreaiahion -220rD. find NDP

NDE =23300, Aeprociakon 2R6D. find DP

Siven GDe- 25500, NDe=25c00, fnd Depsecihan.

snre (GsDs6 Nahonal frcoduct) Lpeo|lion = NNP

e(Net Nahonal Produc) + Deprecia hon GiNf
GNP NNP Deprecia ton
 Data
Page
Calenlat
the follean Depseoi
dataiakian on. Capilal Assa oran
THems
Capttal Value athe aset
Etimatedlife ofte as
Seap value 2oyeans

Dapreciahon on Capikal Assete

Capital Valua the asuet -Sorap Vahe
Estinatd ite af the asie
R0o0 -- 0

Caloulata Dasaoiabian. on Capital Asset m

datai
Ane hsllasing
Jtenms aset
£stnatad lie afthe theat Rayears
Capttal Value of 3.500 Ue
Soapalue 500ul

Anslapresiatom on Capital 3500 -s00

Asset =
3000
20
 Cirulan Elaw in. a Gimple kcrnony
a

A sinpe. e assumes the existence afo ong

de.ad seak
Sects. ie houhold seao amd
amd girm
im scto.
set.
Houselholds
and consumes al govds and &envicas.
firms procue qgoods and sanvices amd sele th
the househota
t is the sinplest om ofa
olosed eonomy , in cohich there is no gounment
and d-fanaig tade.
dlruscld
Auseksd secka Suplie
(ock
Jacko
sevices anly ta fims amd the fme fisu
Services ony tm househok.ouseholds
reoeive factos incene for thin sevices and spe
the entire anount. n consumption a grdo ard
S03iee. 'hee ae mo Savings n the eeongmy
nethea the toushat!s kave frm tueth inoma
the fims Save fram
ham ttheir prosts.
Real Floo în a Jhe outasn loop of
Jeso- Seton diagram shas
eamamg
Giooda Produced &.
ractos GenYice5
husehots to fr
Sald by the. and coeaperd
lousehod Rodue
Seaton Seota ATYioBrm
to hnushod.
fims

(land,labow
JeCopi lal, Enprengn
hdened ky he
 Dboto

Cchape
Cioulan larw
Jhee ae tao
oReal Flow
O Meney Flas
Real Flau:
t nehos to the, as of fackagn Sanvices
hausekolds to firms and the casoLspndeng-fna
af gods and senvies fam Brms to tksaehod
Physical l .
rm hms 0to aruald ond hauseholds to
Krms coithaut involvenant a amy money.
dt determines the mmgnitde
proceSs in. am ecanomy.
Ex hem ml tacto Seviees ane offorad to
7rms, then valume af praduchon uill he
ne and it speeds up the process o
econsmc

Mmey flawi
Rlns geleos
Mone Rms o flas a featons payna
o hausehgdsag thin acko
sonites bnd cosespanding ns af cansumphian
ngendtun fom
puchae a qrods arnd ovicas praduced y the

enaange
 Chapter . Date
Page

Nimal Residents:
Noomal Residens a a counloy nelers toto a
îndividual on an msitulon -who oinoidy 9eaideg
the aontuy and hase enre eonome inlne
also lies in that Cauny
Jhe sesidenta lives o is located ojthin the Oomestc
densilsxs
Jhe.
and
seeshdert c9ies out basic eosnonic achiities a
eLningsspending andand aoumlaioam that locatinn
Ngt inscluded s
Foscen toueit and visitos
foxaign stalh a Snbasises, mankan of aomd faes.
Statnahonal 9nganisatisn like WHO,UNO
Emaleyees intennakonal ohganisating.
Bonde wHUERS, Coe membens oseign veKsal.
Citanship and Residentskip cee too dfeunt thinge
J s basially a lagal ameaft basad on the place. af btatk.
af the pen[nD cAsme logal. poisions allaing a
piSnto become a atizen. So Sodian eiteanship a
a When a parson t6s born in Sndia, ke aceqtres
aukomaha ciicenslip o Sndio..
(b) Aqngson bosn.out&ide Sndia appies fro eitizen
and'Sndian lae) allaos him tobecome Jrcan citiz

15 a eecongtnic Concept boased on the basic economuc

achvites paonmed by a gonson
irdividual is a omal aesident a acen
he ohdinoouly sides i
than One dn
ls Cies couny
and kis cene al Ceccnomi
nteresl

in that
cunsy
eoumby
 Paga

Domestt aoduct vs Nalional Iroduct:

Qomeshe product iudes produchion. umits locatad in
at bs he sesidents .on nom sesidents. dt méms.kinal.
Javd land omices producad oy føragn Nahinmals (ixe tor
asi) and by dndian. Natickal's (like Patanjal, Tola
Raliuac che) atthin the domeshic. terou'tou: f Sndia
a l be added ta get Sndia's domste producthemr
value. a domeshe pxoduct iatermad aadmeohic ncame.

Naianal oduct încludes produchim aaieiky.nonmal

pbtoomad zaikin
Hesident irespeciue act ziketat
oon.ubside t.
tha ecanamic Lositasuy 01
Faatssn ncame 2 factos produchtarn
to încome TRceied by
Q snefes produchim pooa,
the
to Deundering factoa &nites in
seceived fon proviîding focon senices af lond,
is
laban, cap'tal. amd emtoHprisl.
amal sesidents o
acuntou
factoa incme of National Jncane.
s nelded in the încama and fackan
noted hot focto
g Shald be the teoo sides ol the Game ci. A
nts ane
paumemts
hcamme fm he viuapaiht af theones
0factos ohiletis achenpayn
eof hacho of produchan. ,
the vieapaint af the produeoms pof af gads aa
lînterest,
SL9vices. bx- Kem, wages,

d ndis to ineotne neceived wihaut nenderhg

aemice in9eluan.
0y produchie

de
44 s mt ineluded n ahonal incom as t
t seallect any praluahon af grda amd Se
 Date
Page

41 am be eiher witin the domeshic tesoi tosy

reia a cauntry o fon abod.
Ex Cldage ponthion , schalanaip, unamplamant
allouance, pecet money el.
Jaxcs cecivedhby m e n t are teanshee
dthe
ihcames al they co seccived sitha
as they
prauidi ng any praichie glonid) in etan.

Capital Tsanjea
hese ae made aut Nheae are made au
a incmme a the wealth af H!

sugulan
Jhese ae heant
Caumphin punposes capiBal famakian.
Ol age pension, Sweshment
Wan damages eh
allswanee.
 Chater Date
Page

Orleene kekacon Ral Puw and Maney

REAL Fanl MONEY FLo.

an sonies betweln firms mone batajeen hins

Land househods. ondhysohalds firms

4 nyalves ercharge

hene may be difiultis difeulhy in case ol

Cohange gends and inenayfla.
chen SenuicOs.

Fo Secoss fEnemy
Seoa Seat
Seat
sneludes all aats in Sncudes
Conswnes kaoCapacikes. hranssahin
and Svices fms he Aoa wellane aith the
and also the econGru do egncy it iss9ust af. the
Oners
o prodyctin hey and sovis, mainkining nvaved in
Tonkes lineHhe fims hies law and sda expeht and

ad yuoe inane housshalds. a public sekey lowa

in gueluovn in the ims praluc. wellare

maje pnit in public lommy

 Dote

Two
SECTOR
LCONOMy

FaconSie
and,babru itertngi

Consumptm
Expendiha

HOUSHOLDS

factorpnNS

AesuMArEAS
hoe ae only two Seetes in the eesny, Pauseha

Jauehad Soatcn
aurd the irms SLuplies
6timms pouoe qundsioeoclon canvicesandnly fotn hausc
amd sSovices ir ent
Dineheldo sreaeive faoton ncme fo thein
ond
amont
ie neithu
the euneheds inn the eene n
thein
he firn AaNe
fran dhes praft
 Date

Page

Jhe outehloop of diagam shaus the heal la

¿e flow of foctan Somvides rem houselhads to firs
hrm ims to Ohinsehald.:
dhe innn loop _haJS the money flas, e fas o
fastan payments om Byms to ouschslds and
the casprndinges a cansumptin enpenditue
, in the eineulan
flasaincamme, prcduchion gemanates acar incml
cOhich is Conrented imto eipanditwre.hs fl
income Conhinues.as proucion, B a continuus
achiihy due to neta 'endlr human cants.g
maKeOthe lau ap încma deineules

CLOSED EcONDMY
t is am ecconoms which has no eoanemic
Sulahimswith akt o Hhe coOd.A closd
eocany has 3seokeuJlaseha Sacto, Broduoa

aiansaateh
OPENDis ambeaNDY
economy
econans hich has econmic selakn th
the o t alHhe C . An openemty har 4
Seolans -laushold sockan,
Guenant Sactaa fomujn sakProducing Sakos,
 Chaptor 2 Lote

Expected Obsolesenee :
Q
occus due to change in chan
în demand taon ds and
ch6nleseeme ispctad oss sovias.
Ä empeatad
t i5 managed
maucing provisien asr Depoeiain Reseme fund
nexpeched QbsoleAcenaei
ceus due to matunal oalamites liKe eanth¡
Hlds, ect: on due to thefts,aidens dd.Loss ah val
o fied asets due to unepacted
Caital Lo66. olbsoleismee 3 teme
DopeBciakcn Capital ose
t nelons to fall n the 4t nefers toloss
value, al Bked assts due
to nomal wean and tean,
yalue ol the fixec
akots due to nfo
pasage a ime. an expected S2em obsolesoence.
obsolaseene. natunal calamiHe
thefts,ascidenkse
No Guch provi'siOh
eplaeement af aQts made in case
as 5 am enpeoted loes
Capital loss as i
Bovisiom s maintalned am wnerpeated Las
an
though depreeiahian reserve towyer, iweurane
fund. af tad aatls is de
to maintain thelass
doo ot the hampu the
procass," produchn proas,
 NET JMDI RECY TAX: Date
Page

adexs to the diferenee between indineet

tanes amd ubsidies.

Nír- dndiruct an- ubaidy

rdirect ax
t efes to those taes hich ae imposed by toe
govevmmt n produchian ond sale a gmds
Senloes Ex GnsT Custom Duty. Cenaa
Cemhal enise.
Praperty tan ad tll

Subsidies.
hese ane Anamoial assistasnel provided by tae
OyoveANeat to
obteclives
a Suda, LPa cuinden is sold at Subsidised Salo
Subsidy io a transkop paupnent' as s the
inamalal anistamae paoud by the qaveenmnt
to groducos
tocta Cost (EC):
J mefens o amaunt paid to fockog o pToduchla
foA thin contribuhn in he produchn. moce
Maet fice (Me):
dk metecs to the price at-hich
achaly Bold in the marset. produat S
Moet ez factoan Coct
(Sndirec tay Sutside)
Moet Rteaz faakor cosj t Nat Sndiot
) J e encepts o indtuet tax amd susdla
hausehsds amd rms.
 NET FACTOR LNCoME FRoM AeRon
NEIA.
9ocived
melens, to mthe difforenoc betwan fackas ncer
the rest af the gld ond faotos
ncme paid to the est a the woald.
NEIA- Factan Smcome earm trom albroa
fackon ncrma yoatd aboad.
bacton incme om alon0Ad ists the income earmat
by the nogmal nesidemks of a caumty ron the
cYest af the whd in the Pom ofO wager, Y
salaies, ntereat, diidemd andetained oanming
faoton incme to to odoraady is the tacton incane pa
to the mamal sesidemks_d othen coumsies iet
nan JUsldents) og theie actore Senviees eoithin

Nahional Income = Damestic Sncomet fta Sner

toaloTaad.

Nahional ncomme - Dmestic Jncome tNETA

NAA can be positive, regahe

posihve awhen income ened Bon abrod
then income paid to abroad.

1s Jennegahve
magaive hen income coned prem akm
income paid to abroad.

to ea uo ohem inceme eounad rem abtoad

modto abroad.
 )Pate,

(9 Eshimain o Naional Tmcam

(D Shaw indehdependune amng dienwnt soclous
cineulatouy af întsatd plas.

(a) g faoiliates he estination o nabonal înetne

eles to undanskand intendepundnae among
AndAretns a the esnemy
Cansumphion Expenditune'?

Components
’ faed Smestmnti
i adston to the sthef ol e assetsathe
producind doing amaaunt'ng yean.
nventoyInrestmenti
invenBtoy ith tthe
0s oddihioh to he stnc o
rndueens durng an aocsnhingyan
praducena
Eley, to that -und ohich the pnoducssçop
to, ccpl aith deqreiakion Losses.in the proeoss

on ooenwnt af natmal aean an tea , acaidemlal

RLpeoted ousole seurce.
danay