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What are the 5 Measures of National Income?

By Balaji

Updated on: February 17th, 2023

Gross domestic product, Net National Product, Gross National Product, Personal Income, and Disposable Income are the five measures of natural income. The five factors listed below are used to calculate national income. This information is required to comprehend the country’s economic performance.

Table of content

(more)
  • 1. Measures of National Income (more)
  • 2. What are the 5 Measures of National Income? (more)

Measures of National Income

Below we have discussed the important measures that show performance as a country. Undoubtedly, you will understand national income measurement easily.

Gross Domestic Product (GDP):

The gross domestic product (GDP) of a country is the total monetary value of all goods and services produced within its borders over a given time period.

  • GDP is typically calculated annually, though it can be calculated quarterly.
  • For example, the US government publishes annual and quarterly GDP estimates.
  • GDP is frequently regarded as a barometer of a country’s economic health because it comprehensively assesses a country’s productivity.

Net National Product (NNP):

  • In a specific period, the monetary worth of the produced goods and services generated by a nation’s population, domestically and abroad, is known as the Net National Product (NNP).
  • It is the same as the gross national product (GNP), the total value of a country’s annual output, less the amount of GNP needed to sustain existing stock by purchasing new items, also known as depreciation.

Gross National Product (GNP):

The Gross Domestic Product (GDP) and the Gross National Product (GNP) are inextricably linked.

  • GNP measures all production activity carried out by a country’s population and domestically owned businesses, whereas GDP measures all production activity carried out within a country’s borders.
  • For example, the US GNP includes US-owned companies operating abroad but excludes foreign-owned companies operating within US borders.

Personal income:

The total amount of money received by a country’s citizens is known as personal income.

  • Personal income can come from various sources, such as wages from a job, dividends, and distributions from investments, rentals from owning property, and profit-sharing from enterprises.

Disposable income:

The amount of money a person or household has available for spending or saving after income taxes have been deducted is called Disposable Income (sometimes known as disposable personal income or DPI).

Summary:

What are the 5 Measures of National Income?

The five measures of natural income are Net National Product, Gross domestic product, Personal income, Gross National Product, and Disposable income. These are different measures but overall show the economic development of the nation.

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