Types of National Income

Types of National Income 

1.    Gross National Product

GNP is the value of all goods & service produced during the year. GNP is used to determine the output level of national economy and therefore may be deemed national income or output. There are linked relationship between output, income, expenditure .Therefore GNP can calculated by using three method i.e. production methods, expenditure method, and income method.

2.    Gross Domestic Product

GNP also include income from export, some people believe that this should be excluded from national income, because this is an external source of income. And therefore by deducting the net income from export, we can get Gross domestic product.

3.    National Income

National income is concept of people income earned during the year. It is important to notes that NNP takes into account business taxes, but these taxes not form part of income of people, therefore these taxes should be excluded.

Similarly subsidies provided by Government is kind of income, but this income does not reflected in GNP, and therefore these should also be added to income of people.

4.    Personal Income

Personal income again relates to income of people, GNP does not take into account transfer payment as national income, while for people, these are income, therefore while calculating personal income, and transfer payment should be included.

Undistributed profit & taxes on profit have not received to people as income, so these both are also excluded from the national income for calculating personal income.