National income is a total value of a country’s final output of all goods and services produced in a year. Concept of National Income: ● GDP (Gross Domestic Product) is the total value of goods and services which are produced only within the territory of a country. It does not include any depreciation of capital goods. It is calculated by Income method, product or value-added method and expenditure method. It is given as, GDP = C + I + G + X – M Where C = consumption expenditure I = investment expenditure G = government expenditure M = import expenditure X = income from export ● GNP (Gross National Product) is the value of goods and service produced by the citizens within the domestic territory as well as abroad in a year. It is given as, GNP = GDP + Factor income Indian Nationals working abroad – factor income of foreign residents working in India GNP = GDP + Net factor income from abroad ● NNP (Net National Product) is the value of goods and services produced in an economy during a year after subtracting the depreciation value lost by capital goods each year. It is NNP at market price because the value of goods and services are taken at its actual market rate. NNP = GNP – Depreciation of capital goods ● National income is also known as NNP at factor cost. It is sum total of incomes of residents of a country in a given period of time including capital consumption or depreciation. All payments that are made to factors of production like land, labour, capital and entrepreneurship are at factor cost at which goods and services are produced. National income = NNP at factor cost