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National Income Formulas for Class 12

The document provides a comprehensive collection of formulas related to National Income, including key concepts such as the relationships between net and gross values, domestic and national income, and the various methods of calculating national income aggregates. It outlines the income, expenditure, and value-added methods, along with distinctions between current and constant prices. Additionally, it covers investment and capital formation metrics, essential for understanding economic performance.

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14 views2 pages

National Income Formulas for Class 12

The document provides a comprehensive collection of formulas related to National Income, including key concepts such as the relationships between net and gross values, domestic and national income, and the various methods of calculating national income aggregates. It outlines the income, expenditure, and value-added methods, along with distinctions between current and constant prices. Additionally, it covers investment and capital formation metrics, essential for understanding economic performance.

Uploaded by

lakshya7verma
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

■ National Income – Complete Formula Collection (Class 12

CBSE)

1. Basic Relations
• Net Value = Gross Value – Depreciation
• Gross Value = Net Value + Depreciation
• Depreciation ≡ Consumption of Fixed Capital ≡ Replacement Cost

2. Domestic vs National
• National Income = Domestic Income + Net Factor Income from Abroad (NFIA)
• Domestic Income = National Income – NFIA
• NFIA = Factor Income Earned From Abroad – Factor Income Paid To Abroad

3. Factor Cost & Market Price


• Market Price = Factor Cost + Net Indirect Taxes (NIT)
• Factor Cost = Market Price – NIT
• Net Indirect Taxes (NIT) = Indirect Taxes – Subsidies

4. National Income Aggregates


• Gross Domestic Product at Market Price (GDP at MP) = Σ Final Expenditures
• GDP at MP = Gross Value of Output – Intermediate Consumption
• Net Domestic Product at Market Price (NDP at MP) = GDP at MP – Depreciation
• Net Domestic Product at Factor Cost (NDP at FC) = NDP at MP – Net Indirect Taxes
• Gross National Product at Market Price (GNP at MP) = GDP at MP + NFIA
• Gross National Product at Factor Cost (GNP at FC) = GNP at MP – Net Indirect Taxes
• Net National Product at Market Price (NNP at MP) = GNP at MP – Depreciation
• Net National Product at Factor Cost (NNP at FC) = NNP at MP – Net Indirect Taxes →
National Income

5. Income Method
• NDP at Factor Cost = Compensation of Employees + Operating Surplus + Mixed Income
• Operating Surplus = Rent + Interest + Profit (Dividend + Retained Earnings + Corporate
Tax)
• Compensation of Employees = Wages & Salaries (Cash + Kind) + Employer’s
Contribution to Social Security
• NNP at Factor Cost = NDP at Factor Cost + NFIA
6. Expenditure Method
• GDP at Market Price = Private Final Consumption Expenditure + Government Final
Consumption Expenditure + Gross Domestic Capital Formation + (Exports – Imports)
• Gross Domestic Capital Formation = Gross Fixed Capital Formation + Change in Stock
• NNP at Factor Cost = GDP at Market Price + NFIA – Depreciation – Net Indirect Taxes

7. Value Added Method


• GDP at Market Price = Σ (Value of Output – Intermediate Consumption)
• Value of Output = Sales (Domestic + Exports) + Change in Stock + Self-consumed Output
• Intermediate Consumption = Raw Material + Energy + Imported Inputs
• NDP at Factor Cost = GDP at Market Price – Depreciation – Net Indirect Taxes
• NNP at Factor Cost = NDP at Factor Cost + NFIA

8. Current vs Constant Prices


• Nominal GDP (Current Price) = Current Year Price × Current Year Quantity
• Real GDP (Constant Price) = Base Year Price × Current Year Quantity
• GDP Deflator = (Nominal GDP ÷ Real GDP) × 100
• Price Index = (National Income at Current Price ÷ National Income at Constant Price) ×
100

9. Investment & Capital Formation


• Gross Investment = Net Investment + Depreciation
• Net Investment = Gross Investment – Depreciation

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