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

Click here for all topics on National Income



Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.