MACRO ECONOMICS 

Important concepts of National Income 

1. Gross Domestic Product at Market Price.    2. Gross National Product at Market Price. 
3. Net Domestic Product at Market Price.        4. Net National Product at Market Price. 
5. Net Domestic Product at Factor Cost.          6. Net National Product at Factor Cost. 
7. Gross Domestic Product at Factor Cost.      8. Gross National Product at Factor Cost. 
9. Private Income.     10. Personal Income      11. Disposable Income. 

(1) Gross Domestic Product at Market Price (GDP at MP):- 
Gross domestic product at market price is the aggregate money value of the final goods and services produced within the country's own territory. So as to calculate GDP at MP all goods and services produced in the domestic territory are multiplied by their respective prices. Symbolically GDP at MP = PXQ. Where P is market price and Q is final goods and services. Best SSC Exams Coaching Centers in Vijayawada 

(2) Gross National Product of Market Price (GNP at MP):- 
Gross national product at market price is broad and comprehensive concept. GNP at MP measures the money value of all the final products produced annually in a counter plus net factor income from abroad. In short GNP is GDP plus net factor incomes earned from abroad. Net factor incomes is derived by reducing the factor incomes earned by foreigners from the country, in question from the factor incomes earned by the residents of that country from abroad. Best Competitive Exams Coaching centers in ap

(3) Net Domestic Product at Market Price (NDP at MP):- 
Net domestic product- at market price is the difference between Net National Product at market price and net factor income from abroad. Net domestic product at market price is the difference been GNP at market price minus depreciation and net factor incomes from abroad. SSC CGL Exams Centers

(4) Net National Product at Market Price (NNP at MP):- 
Net National product measures the net money value of final goods and services at current prices produced in a year in a country. It is the gross national product at market price less depreciation. In production of output capital assets are constantly used up. This fixed capital consumption is called depreciation. Depreciation constitutes loss of value of fixed capital. Thus net national product is the net money value of final goods and services produced in the course of a year. Net money value can be arrived at by excluding depreciation allowance from total output. Best RRB Coaching Centers

(5) Net Domestic Product at Factor Cost (NDP at FC):- 
Net Domestic product of factor cost or domestic income is the income earned by all the factors of production within the domestic territory of a country during a year in the form of wages, interest, profit and rent etc. Thus NDP at FC is a territorial concept. In other words NDP at factor cost is equal to NNP at FC less net factor income from abroad. Best Railway Jobs Coaching Centers

(6) Net National Product at Factor Cost (NNP at FC) 
Net national product at factor cost is the aggregate payments made to the factors of production. NNP at FC is the total incomes earned by all the factors of production in the form of wages, profits, rent, interest etc. plus net factor income from abroad. NNP at FC is the NDP at FC plus net factor income from abroad. NNP at FC can also be derived by excluding depreciation from GNP at FC.Railway Jobs Coaching Centers 

(7) Gross Domestic Product at Factor Cost (GDP at FC): 
Gross Domestic Product at factor cost refers to the value of all the final goods and services produced within the domestic territory of a country. If depreciation or consumption of fixed capital is added to the net domestic product at factor cost, it is called Gross domestic Product at Factor cost.Staffselection Commission Coaching Centers in ap 

(8) Gross National Product at Factor Cost (GNP at FC):- 
Gross national product at factor cost is obtained by deducting the indirect tax and adding subsidies to GNP at market price or Gross national Product at factor cost is obtained by adding net factor incomes from abroad to the GDP at factor cost. ALP Trining Centers in ap
 

(9) Private Income:- 
Private income means the income earned by private individuals from any source whether productive or unproductive. It can be arrived at from NNP at factor cost by making certain additions and deduction. The additions include (a) transfer earnings from Govt, (b) interest on national debt (c) current transfers from rest of the world. The deductions include (a) Income from property and entrepreneurship (b) savings of the non- departmental undertakings (e) social security contributions. In order to arrive at private income the above additions and subtraction are to be made to and from NNP at factor Cost.Best ALP Coaching Centers

(10) Personal Income:- 
Personal Income is the total income received by the individuals of country from all sources before direct taxes. Personal income is not the same as National Income, because personal income includes the transfer payments where as they are not included in national income. Personal income includes the wages, salaries, interest and rent received by the individuals. Personal income is derived by excluding undistributed corporate profit taxes etc. from National Income. Top Govt Jobs Coaching Centers

(11) Disposable Income:- 
Disposable income means the actual income which can be spent on consumption by individuals and families. It refers to the purchasing power of the house hold. The whole of disposable income is not spent on consumptions; a part of it is paid in the form of direct tax. Thus disposable income is that part of income, which is left after the exclusion of direct tax. Best SSC CHSL Trining Centers
Concepts 
• NNP Mp = GNP mp - depreciation 
• NDP Mp = GDPmp – depreciation 
• NDP Fc = NDP mp – Net indirect taxes (indirect tax – subsidies) 
• GDP Fc = NDP fc + depreciation 
• NNP Fc = GDP mp - depreciation + Net factor income from abroad – Net indirect taxes 

Define nominal GNP 
Ans. GNP measured in terms of current market prices is called nominal GNP. 
Define Real GNP. 
Ans. GNP computed at constant prices (base year price) is called real GNP. 
Factor Payment: Factor payment is a payment made in lieu of providing goods and services. A worker gets the wages is the factor payment because he worked for it. 
Transfer payment: If there is no obligation involved to deliver service or goods in return of the payments is called transfer payment. Examples are: donation, old age pension, unemployment benefit, scholarship etc. SSC Online Coaching Centers

METHODS OF CALCULATING NATIONAL INCOME 
I - PRODUCT METHOD (Value added method): 
• Sales + change in stock = value of output 
• Change in stock = closing stock – opening stock 
• Value of output - Intermediate consumption = Gross value added (GDPMp) 
• NNP Fc (N.I) = GDPMp (-) consumption of fixed capital (depreciation) 
(+) Net factor income from abroad ( -) Net indirect tax. 

Income method: 
1. Compensation of employees. 
2. Operating surplus. 
Income from property- Rent & Royalty Interest 
Income from Entrepreneurship- Profit, Corporate dividend, Tax Savings (Net retained earnings) 
3. Mixed income of self-employed. 
• NDP fc = (1) + (2) + (3) 
• NNP fc = NDP fc (+) Net factor income from abroad 
• GNP mp = NDP fc + consumption of fixed capital + Net indirect tax(Indirect tax – subsidy) 

Expenditure method: 
1. Government final consumption expenditure. 
2. Private final consumption expenditure. 
3. Net Export. 
4. Gross domestic capital formation=Gross Domestic fixedCapital formation+ Change in stock 
GDPmp = (1) + (2) + (3) + (4) 
NNP fc = GDPmp - consumption of fixed capital + NFIA- Net indirect taxes 
Note: If capital formation is given as Net domestic capital formation we arrive at NDPmp.Capital formation = Investment 

INTRODUCTION TO MACRO 
Autonomous consumption: The consumption which does not depend upon income or the amount of consumption expenditure when income is zero. 
Autonomous Investments: It is Investment which is made irrespective of level ofincome. It is generally run by the government sector. It is income inelastic. Thevolume of autonomous investment is same at all level of income. Best SSC JE Exams Coachig Centers in ap 
Investment multipliers and its working. 
Investment multiplier explains the relationship between increase in investment and the resultant increase in income. 
Investment multiplier is the ratio of change in income to change in investment. Multiplier (k) =Δy/ΔI.  The value of multiplier depends on the value of marginal propensity to consume (MPC).  There is direct relationship between k and MPC. SSC GK Study Materials free Download

INFLATION TYPES 

Comprehensive Inflation: When the prices of all commodities rise throughout the economy. 
Sporadic Inflation: When prices of only few commodities in few regions (areas) rise. It is sectional in nature. 
Open Inflation: When government does not attempt to restrict inflation, it is known as Open Inflation. In a free market economy, where prices are allowed to take its own course, open inflation occurs. 
Suppressed Inflation: When government prevents price rise through price controls, rationing, etc., it is known as Suppressed Inflation. It is also referred as Repressed Inflation. 
Hyperinflation: Hyperinflation refers to a situation where the prices rise at an alarming high rate. The prices rise so fast that it becomes very difficult to measure its magnitude. However, in quantitative terms, when prices rise above 1000% per annum (quadruple or four digit inflation rate), it is termed as Hyperinflation. 
Deficit Inflation: Deficit inflation takes place due to deficit financing. 
Credit Inflation: Credit inflation takes place due toexcessive bank credit or money supply in the economy. 
Scarcity Inflation: Scarcity inflation occurs due tohoarding. Hoarding is an excess accumulation of basic commodities by unscrupulous traders and black marketers. 
Profit Inflation: When entrepreneurs are interested inboosting their profit margins, prices rise. 
Demand-Pull Inflation: Inflation which arises due to various factors like rising income, exploding population, etc., leads to aggregate demand and exceeds aggregate supply, and tends to raise prices of goods and services. This is known as Demand-Pull or Excess Demand Inflation. 
Cost-Push Inflation: When prices rise due to grow ing cost of production of goods and services, it is known as Cost-Push (Supply-side) Inflation. For e.g. If wages of workers are raised then the unit cost of production also increases. As a result, the prices of end-products or end-services being produced and supplied are consequently hiked.Free SSC Materials 

Money supply 
The Reserve Bank of India (RBI) is the central bank of our country. It manages the monetary system of our country. It has classified the money supply of our country into four components. 
They are : 
M1 = Currency with the public. It includes coins and currency notes + demand deposits of the public. M1 is also known as narrow 
money ; 
M2 = M1 + post office savings deposits ; 
M3 = M1 + Time deposits of the public with the banks. M3 is also known as broad money ; and 
M4 = M3 + total post office deposits. 
Note: Besides savings deposits, people maintain fixed deposits of different maturity periods with the post office. 
Fiat Money: Currency notes in circulation are normally referred to as fiat money. For example, one Rupee notes issued by the Government of India is Fiat money.The notes issued by the RBI are usually referred to as bank notes.They are in the nature of promissory notes. Top rated institutes in Vijayawada for SSC Coaching