1] National Product
National product refers to the flow of goods and services in the economy in a given period of time usually a year. It is the value (volume) of goods and services, both tangible and intangible, produced in the economy in a given period of time usually a year.
It includes the final goods and services produced and exchanged for money in a country during a given year. Intermediate goods and services are ignored while calculating national income in order to avoid double counting.
It does not include goods and services which are not paid for eg services of housewives, services rendered to self, services undertaken out of love, charity etc.
Factors of production
[Land/Labour/Capital/Enterprise]
Households Business Firms
Goods and Services
2] National income/dividend
The modern economy is a monetary economy and therefore national income is the total income of the nation in a given year which according to the National Sample Survey [NSS], “the money measure of net aggregate of all commodities and services, accruing to the inhabitants of a country during a specific period of time”.
It is the expression in money terms of goods and services produced by a country during a given period of time, usually a year.
It includes the total income flow which is exactly equal to the value of national product in a given year.
NP = NI
Factors income
[Rent&royalty/Wages&salaries/Interest÷nds/Profits]
Households Business Firms
Consumption expenditure
3] National expenditure
Income earned is spent on various goods and services by thr households, business firms and government.
This is the national expenditure which is exactly equal to the national income
NE = NI
Therefore NP = NI = NE
Factors cost
[Rent&royalty/Wages&salaries/Interest÷nds/Profits]
Households Business Firms
Consumption expenditure