• Gross Domestic Product is the market value of all final goods and services produced within a domestic territory of a country measured in a year.
• All production done by the national residents or the non-residents in a country gets included, regardless of whether that production is owned by a local company or a foreign entity.
• Everything is valued at market prices.

GDPMP = C + I + G + X – M

• Gross Domestic Product at factor cost is gross domestic product at market prices, less net product taxes.
• Market prices are the prices as paid by the consumers Market prices also include product taxes and subsidies. 
• The term factor cost refers to the prices of products as received by the producers. Thus, factor cost is equal to market prices, minus net indirect taxes. 
• Gross Domestic Product at factor cost measures the money value of output produced by the firms within the domestic boundaries of a country in a year. 

GDPFC = GDPMP – NIT

• This measure allows policy-makers to estimate how much the country has to spend just to maintain their current GDP.
• If the country is not able to replace the capital stock lost through depreciation, then GDP will fall. 

NDPMP = GDPMP – Dep

• NDP at factor cost is the income earned by the factors in the form of wages, profits, rent, interest, etc., within the domestic territory of a country. 

NDPFC = NDPMP – Net Product Taxes – Net Production Taxes

• GNPMP is the value of all the final goods and services that are produced by the normal residents of India.
• It is measured at the market prices, in a year. 
• GNP refers to all the economic output produced by a nation’s normal residents, whether they are located within the national boundary or abroad. 

GNPMP = GDPMP + NFIA 

• GNP at factor cost measures the value of output received by the factors of production belonging to a country in a year. 

GNPFC = GNPMP – Net Product Taxes – Net Production Taxes

• This is a measure of how much a country can consume in a given period of time. 
• NNP measures output regardless of where that production has taken place (in domestic territory or abroad). 

NNPMP = GNPMP – Depreciation 

NNPMP = NDPMP + NFIA

 Or 

National Income (NI)

• NNP at factor cost is the sum of income earned by all factors in the production in the form of wages, profits, rent and interest, etc., belonging to a country during a year. 
• It is the National Product and is not bound by production in the national boundaries. 
• It is the net domestic factor income added with the net factor income from abroad.

NI = NNPMP – Net Product Taxes – Net Production Taxes = NDPFC + NFIA = NPFC

• GDP at market prices

• GVAMP – Net Product Taxes 

• GVA at basic prices – Net Production Taxes 

Table – Basic National Income Aggregates

• Economic Agents or Units: Economic agents refers to individuals or institutions that make economic decisions. These agents can be consumers or producers of goods and services. Additionally, entities like the government, corporations, and banks also make economic decisions.
• Great Depression: A severe worldwide economic depression that took place in the 1930s, characterized by high unemployment and economic hardship.
• Unemployment Rate: The percentage of the labor force that is currently unemployed and seeking employment.
• Four Factors of Production: The essential resources required for production: land, labor, capital, and entrepreneurship.
• Means of Production: The facilities and resources used to produce goods and services, including machinery, factories, and land.
• Inputs: The resources, including labor, materials, and capital, used in the production of goods and services.
• Entrepreneurship: The innovative and managerial skills of individuals who take the initiative to start new businesses or improve existing ones.
• Investment Expenditure: Spending by firms or individuals on capital goods or assets, aimed at increasing future production or income.
• Capitalist Country or Capitalist Economy: An economic system characterized by private ownership of the means of production and free-market competition.
• External Sector: The part of the economy that interacts with foreign countries through trade, including exports and imports.
• Final Goods: Products that are ready for consumption by households or businesses.
• Consumer/Consumption Goods: Goods purchased by households for immediate use or consumption.
• Consumer Durables: Products that have a longer lifespan and are typically used repeatedly by households, such as appliances.
• Capital Goods: Goods used by businesses and organizations to produce other goods or services.
• Intermediate Goods: Products used as inputs in the production of other goods and services.
• Depreciation: The reduction in the value of capital assets over time due to wear and tear or obsolescence.
• Circular Flow of Income: A model that illustrates the flow of income and expenditure between households, firms, government, and the external sector within an economy.
• Macroeconomic Model: A simplified representation of an economy used by economists to analyze and predict economic trends and relationships.
• Inventories: Stocks of goods or materials held by firms to meet future demand or production needs.
• Gross Domestic Product (GDP): The total value of all final goods and services produced within a country’s borders in a specific time period.
• Net Domestic Product (NDP): GDP minus depreciation, representing the net addition to the economy’s capital stock.
• Gross National Product (GNP): The total value of goods and services produced by a country’s residents, whether within the country or abroad.
• Net National Product (NNP): GNP minus depreciation, representing the net addition to the nation’s capital stock.
• NNP (at Factor Cost) or Undistributed Profits: NNP minus net indirect taxes (indirect taxes minus subsidies).
• National Income (NI): The sum of all factor incomes earned by households and firms within an economy.