ECONOMICS (NATIONAL INCOME & INFLATION

NATIONAL INCOME
Market value of all final goods and service-1000(with boundary of country)

Indian income from foreign-100

Total income= 1000(GDP) + 100
                     =1100 national income

Market value of all final goods and services produced within domestic boundaries of countries including Indian Income which come from foreign in a year 

FINAL GOODS

A goods in which no changes is allow or no transformation.

EXCLUDES ITEM

*Unfinished intermediary goods price
*Housewife income 
*Black money 
*Pension ,subsidies, scholarship, charity ,donation, gambling, gifts, Grants etc..

CONCEPT OF NATIONAL INCOME

GDP=Gross Domestic Product
Market value of all final goods and services produced within domestic boundary of country in a year

NDP=NET DOMESTIC PRODUCT 
NDP=GDP-DEPRECIATION
GNP=GROSS NATIONAL PRODUCT
GNP=GDP+(X-M)

Where as,
X=Indian income from foreign
M=foreigner income from India
(X-M)=net factor income from abroad (NFIA).

GNP=GDP->CLOSED ECONOMY

GNP=GDP+PRIYANKA CHOPRA INCOME FROM HOLLYWOOD-DE VILLIERS INCOME FROM IPL 
NNP=NET NATIONAL PRODUCT
NNP=GNP-DEPRECIATION

GNP-NNP=DEPRECIATION

NNP at factor cost production cost real cost=>NNP at market price-indirect tax + subsidies

PERSONAL INCOME

PI=NI-social security contribution - undistributed corporate profit - corporate tax + transfer payment (pension, subsidies, scholarship etc)

DISPOSABLE INCOME

DI=PERSONAL INCOME- PERSONAL TAX( DIRECT TAX)

......OR......

SAVING + CONSUMPTION

3 LAKH->0%
3 TO 5 LAKH-> 5%
5 TO 10 LAKH-> 10%

PER CAPITAL INCOME

=>Total income / total population

........or.........

=>National income / total population

......or......

GDP / total population

MEASUREMENT OF NATIONAL INCOME

*Production/ output/ value added method

*Income method

*Expenditure method /consumption method

PRODUCTION METHOD

Market value of all final goods and services produced by all sector of economy.

INCOME METHOD

SALARY + WAGES+ INTEREST + RENT etc....

EXPENDITURE METHOD
C + I + G +( X - M)

WHERE AS,,

C=CONSUMER EXPENDITURE
I=INDUSTRIAL INVESTMENT
G=GOVERNMENT EXPENDITURE
X-M=EXPENDITURE ON EXPORT AND IMPORT

*First attempt to calculate national income =>Dadabhai naoroji (1867 to 68)

*First scientific to calculate national income=> professor VK RV Rao- 1932

*First official to calculate national income =>professor PC mahalanobis 1949

Base year of national income 2011 to 12

NSSO(1950)=>National Sample Survey office/ organisation

CSO(1951)=>CENTRAL STATISTICAL OFFICE/ ORGANISATION
.......................................................................................................................

*Inflation*(CHAPTER)
Inflation is nothing but a rise in the price level of goods and services
Price.↑↑↑↑↑↑ up
Characteristics of inflation

*Price of goods and services ↑
*Supply / liquidity of money ↑
*Value of money↓
*Purchasing power of money↓
*Purchasing power of person↑
*Production↓
*Supply ↓
*Demand↑

IMPACT OF INFLATION

1.Consumer ↓
2. Producer ↑
3. Farmer↑
4. Investor/ entrepreneur↑
         a. Short term ↑
          b. long term↓
5. Salaried person↓
6. Wages↓ 
7. Debtors ↑
8. Creditor↓

TYPES OF INFLATION

1. Demand side inflation →demand pull inflation
2. Supply side inflation →cost push inflation
3. Price level inflation →creeping 0% to 4%
               Galloping→10% to  40%
                 Hyper→ 40% to infinitive

DEMAND PULL INFLATION

When price of goods increases due to high demand of goods in market.

SUPPLY SIDE INFLATION

When price of goods increased due to high production cost.

RBI→ideal stage→ 4% to 5% is good inflation.

IMPORTANT TERMS OF INFLATION

DEFLATION→Price of goods and services decrease ,supply of goods increases ,supply of money decrease ,and value of money increases.

RECESIONS→When aggregate demand supply board decreases due to lack of money, GDP growth rate become negative which create high unemployment.

DIS-INFLATION→When Government and RBI try to control the rate of inflation. When Government and RBI try to control the rate of inflation

REFLECTION→When Government and RBI try to decrease the rate of deflation or increase the rate of inflation.

DIS-INVESTMENT→When government sale out some stick of its own company for money which increases privatisation.

DEVALUATION→When government deliberately decreases value of domestic currency in comparison to other international currency for increasing.

STAGFLATION→Export and improving balance of payment.
When growth rate very slow but rate of unemployment is very high or inflation will rising unemployment or stagnation with inflation unemployment or high inflation with recession.

PHILLIP CURVE→According to Philip curve relationship between rate of inflation and unemployment will inverse.

HOW TO CONTROL INFLATION

Liquidity of money↑→↓→→inflation↑
                                   Control


Liquidity of money↓→↑→→↓



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