Is national income at factor cost or market price?

Thus, NNP at market price is gross national product at market price minus depreciation. Net National Product at factor cost is also called as national income. Net National Product at factor cost is equal to sum total of value added at factor cost or net domestic product at factor cost and net factor income from abroad.

What is the difference between factor price and market price?

The factor cost refers to the cost of factors of production that is directly incurred by a firm when producing goods and services. The market price is the price that consumers will pay for the product when they purchase it from the sellers, and it is made partially of the factor cost.

What does national income does not include?

Interest on public debt. No, it is not included in the national income as it is the interest paid on loans taken by government to meet its consumption purposes. No, it is not included in the national income as it is a part of the factor income paid abroad. It is subtracted from domestic income to get national income.

Which of the following is not included in the estimation of national income?

Unemployment Allowance: This is available to those persons who are not employed. This is, therefore, only a transfer payment not included in National Income. Therefore, Unemployment Allowance is not included in the calculation of National Income.

What do you mean by national income at constant price?

It is the money value of final goods and services produced by normal residents of a country in a year, measured at base year price. If we measure India’s National Income of 2013-2014 at the prices of 2004-2005, then it is termed as ‘National Income at constant price’.

Why the value of intermediate good is not included during estimation of national income explain with the help of an example?

It is an intermediate expenditure for the firm because it involves purchase of services by one production unit (firm) from another production unit (lawyer). So, it is deducted from the value of output of the firm to arrive at the value added. So, it is not included in national income.