Relationship with 8 variants of national product aggregates, Macroeconomics

 

RELATIONSHIP WITH 8 VARIANTS OF NATIONAL PRODUCT AGGREGATES 

We have shown the distinction between national product at market prices and national product at factor cost, based on whether or not net indirect taxes have been included. And there is also a distinction between gross or net national product according to whether investment is inclusive of capital consumption or not. Further, a distinction has been drawn between domestic and national product, according to whether we are measuring net factor income from abroad (i.e. the net return on factors owned by nationals of the country concerned) or whether we are measuring what is produced within the domestic economy. This implies that there are eight possible combinations of national product aggregates, as shown below.

Gross Domestic Product (GDP)    at market prices (MP)

                                                 at factor cost (FC)

Gross National Product (GNP)      at market prices (MP)

                                                at factor cost (FC)

Net Domestic Product (NDP)        at market prices (MP)

                                                  at factor cost (FC)

Net National Product (NNP)         at market prices (MP) 

                                               at factor cost (FC)

The way that these national product aggregates are related to each other can be understood from the figure 3.2.

                                                     Figure 3.2 

595_Figure 3.2.png

 

 

We can sum up the differences between gross and net, market prices and factor cost and national and domestic concepts in the following way:
Gross=Net + Depreciation

Market Prices=Factor Cost + [Indirect Taxes - Subsidies]

National=Domestic + Net Factor Income from Abroad

There are some national product aggregates that are more frequently met with and we have several ways of ordering them. One of these is as follows:

i. Gross domestic product at market price + net factor income from abroad equals

ii. Gross national product at market prices - net indirect taxes (indirect taxes - subsidies) equals

iii. Gross national product at factor cost - capital consumption (depreciation) equalsiv. Net national product at factor cost, which is popularly known as national income.  

 

Posted Date: 9/12/2012 2:31:14 AM | Location : United States







Related Discussions:- Relationship with 8 variants of national product aggregates, Assignment Help, Ask Question on Relationship with 8 variants of national product aggregates, Get Answer, Expert's Help, Relationship with 8 variants of national product aggregates Discussions

Write discussion on Relationship with 8 variants of national product aggregates
Your posts are moderated
Related Questions

Effective Demand The concept of effective demand is the logical starting point of Keynes Theory of Employment. Effective demand manifests itself in the aggregate expenditure of

Explain the difference among saving and investment as explained by macroeconomists. Which of the following situations represent investment or saving? Explain: a) You u

Your firm usually uses about 200-300 tons of steel per year. Last year, you purchased 100 tons of steel than needed (at a price of $200 per ton) In the meantime, the price of steel

Question: Table below shows the recent trends in terms of consumption. (a) (i) Explain what is meant by the term ‘marginal propensity to consume' (MPC) and the ‘averag

Suppose that a public park is visited by people living in five concentric zones around the park. Each zone has a population of 5000, and the total travel cost for a visit to the pa

Suppose a firm raises $23 million dollars by issuing debt at a cost of 6.1%, raises $14 million by issuing common stock at a cost of 8.6% and raises an additional $10 million by is

We have been looking at just the Additional Marginal Opportunity Costs of our choices. What about the total cost? For example, we see and hear ads all the time about different cell

using a classical labour market , illustrate the effects of a real wage existing in the market that is lower than the equilibrium real wage. what will eventually happen in this lab