Some Important concepts related to National Income Accounting

National income, GNP-the sum of all income in the country derived from providing factors of production in the country or overseas, income received by Malaysian in Malaysia and overseas

Domestic income GDP-income earned/rewards to the factors of production within a country

Market price-price that consumer have to pay to get the product, thus it includes indirect taxes and excludes subsidies given to producers.

Factor cost(fc)-cost(price) to the producer, this excludes indirect tax and includes subsidies

Indirect business taxes such as sales, excise taxes, license fees and custom duties are paid by business to the government. Since these are incomes to the government, it must be added to national income

Depreciation allowance/capital consumption-the amount of capital equipment used up in each year’s production

GNP-depreciation=NNP

Gross Investment-depreciation=Net Investment

Personal income=national income-undistributed profits of companies-epf + transfer payments

Disposal personal income/disposal income=personal income-direct taxes

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