How to calculate net national product at factor cost?
Answers
After the deduction of personal taxes from personal income of the individuals, what is left is personal disposable income which is equal to consumption plus saving. Mathematically, the relationships can be summarised as follows:
A GNP at market price - depreciation = NNP at market price.
A GNP at market price - net income from abroad = GDP at market price.
A GNP at market price - net indirect taxes = GNP at factor cost.
A NNP at market price - net income from abroad = NDP at market price.
A NNP at market price - net indirect taxes = NNP at factor cost.
A GDP at market price - net indirect taxes = GDP at factor cost.
A GNP at factor cost - depreciation = NNP at factor cost.
A NDP at market price - net indirect taxes = NDP at factor cost.
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Net national product at factor cost also known as national income of a country.
Explanation:
The country's growth can be measured by its GDP rate, GDP( gross domestic product) is the sum total of all the value of goods and services produced in a year.
by taking GDP as base we can calculate the national income (NNP at factor cost) from the following formula:-
NNP at factor cost =
GDP at market price - indirect taxes + subsidies + net factor income from abroad - consumption of fixed capital.
the following answer will be treated as national income of the country.