Meaning of National Income: It is the sum of factor incomes earned by normal residents of a country in the form of rent, wages, interest and profit in an accounting year.
Final Goods: All goods which are meant either for consumption by consumers or for investment by firms are called final goods.
Intermediate Goods: All goods which are used as raw material for further production of others goods or for resale in the same year.
Consumer Goods: The goods which satisfy the wants of consumers directly are called consumer goods.
Producer Goods: The goods which help in the production of other goods and services are called producer goods or capital goods.
Factor Cost: It refers to all factor payments made by the producing unit to the factors of production for rendering productive services.
Mark price: It is the price at which a commodity is sold and purchased in the market. Market Price (MP) = Factor cost + Net Indirect Taxes (Indirect Taxes - Subsidies).
Indirect Taxes: Taxes which are levied by the government on production and sale of commodities are called indirect taxes.
Subsidies: Cash grants given by the government to the enterprises to encourage production.
Net Factor Income from Abroad (NFIA): Factor income earned from abroad by residents - Factor income of non-residents in domestic territory. NFIA = Net Compensation of employees + Net income from property and entrepreneurship + Net retained earnings of resident companies abroad.
