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CHAPTER TWO: MEASURING NATIONAL INCOME AND
OUTPUT
DEFINITION/CONCEPT
GROSS DOMESTIC PRODUCT (GDP): TOTAL MARKET VALUE OF ALL FINALS GOOD
AND SERVICES PRODUCED WITHIN A GIVEN PERIOD OF TIME BY FACTORS OF
PRODUCTION WITHIN A COUNTRY.
GROSS NATIONAL PRODUCT (GNP): TOTAL MARKET VALUE OF ALL FINALS GOOD
AND SERVICES PRODUCED BY THE RESIDENTS OF A COUNTRY DURING A GIVEN
PERIOD OF TIME.
MARKET PRICE: CURRENT PRICE IN THE MARKET THROUGH THE FORCES OF
DEMAN AND SUPPLY.
FACTOR COST: PRICES OF OUTPUT THAT IS VALUED BASED ON THE COST OF
FACTORS OF PRODUCTION.
NET NATIONAL PRODUCT (NNP)/ NATIONAL INCOME: VALUE OF NATIONAL
INCOME WHICH IS ADJUSTED BY THE VALUE OF DEPRECIATION
PERSONAL INCOME (PI): THE REAL INCOME EARNED BY HOUSEHOLD BEFORE
THEY PAY PERSONAL INCOME TAXES.
DISPOSABLE PERSONAL INCOME(DPI): VALUE OF PERSONAL INCOME MINUS
PERSONAL INCOME TAX
INCOME APPROACH: LOOKING AT GDP FROM PERSPECTIVES OF THE SUMS OF
INCOME RECEIVED FORM THE PRODUCTION OF OUTPUT
EXPENDITURE APPROACH: LOOKING AT GDP FROM PERSPECTIVES OF THE TOTAL
SPENDING ON THE FINAL GOODS AND SERVICES.
PRODUCT/OUTPUT APPROACH: ADDING UP THE NET VALUE OF ALL THE GOODS
AND SERVICES PRODUCED IN THE COUNTRY
NOMINAL INCOME: NATIONAL INCOME MEASURED AT CURRENT PRICES
REAL INCOME: NATIONAL INCOME MEASURED AT CONSTANT PRICE/ BASE YEAR
PER CAPITA INCOME: AVERAGE INCOME PER HEAD OF POPULATION
GROWTH RATE: PERCENTAGE CHANGE IN QTY OF GOODS AND SERVICES
PRODUCED FROM ONE TO ANOTHER.
