National Income: Definition, Benefits, Concepts & Calculation Methods
See you again with us, yuksinau.id who always discusses all the science that you definitely need to know. And this time yuksinau.id had the opportunity to discuss the material about National income.
Come on just take a good look at the reviews below.
Table of contents
National income
Hi friends, do you know how many times in a month you have shopped?
So what does this have to do with national income, confused?
So, if you carry out an economic activity even in a small context, you already have a role in influencing national income you know.
This is because national income or also called Gross Domestic Product (GDP) is calculated from the amount of income obtained by all family households (RTK) in a country from the submission of factors in one period certain.
Definition of National Income
The definition of national income can be found through three approaches, what are they? Check out the following reviews:
1. Production approach
Through the production approach, national income can be defined as the sum of the added value of each good and service obtained by a country in a certain time.
2. Income approach
For the income approach. The meaning of national income itself is that which calculates the amount of income earned by the owner of the factors of production used to facilitate the production of goods and services of a country in a certain period.
3. Expenditure approach
And the last approach is the safe spending approach in calculating National income comes from the total expenditure of all economic actors, both domestically and abroad during a certain period.
Components of the spending approach
The components of the income or acceptance approach, including:
- Mining and quarrying
- Agriculture, plantations, livestock and fisheries.
- Electricity, gas and water
- Processing industry
- Trade, hotel, restaurant.
- Trading
- Transport and communication
- leasing and also financial services
- Other services.
National Income Benefits
As for some of the benefits generated by national income, including the following:
- Knowing and studying the structure of the economy.
- Knowing the economic development in the country from year to year.
- Knowing the development of the economy between regions.
- To compare economic progress between countries over time.
- Become a source of information for the government.
- Become a guideline for the government to make economic policies.
- Comparing welfare levels between countries.
- Measuring the level of prosperity of a country.
Calculation Concepts and Methods
To calculate national income, you must know the concepts in national income. Curious about anything? Listen carefully..
1. GROSS DOMESTIC PRODUCT (GDP) or GROSS DOMESTIC PRODUCT (GDP)
Definition: the number of products in the form of goods and services obtained from various production units within the boundaries of a country during a period of one year.
The production unit is also included in it foreign companies, however with notes the area of operation is still within the territory of a country lol yes.
Example:
A skincare company originating from Korea but having branches in Indonesia, Well from there the production results must also be calculated into GDP. So far so good right? hihi
Formula:
The formula for calculating a country's GDP is:
GDP = Income of Indonesian Citizens in domestic + foreigner income in pendapatan domestic.
2. GROSS NATIONAL PRODUCT (GNP) or GROSS NATIONAL PRODUCT (GNP)
Definition: the value of tangible products and services obtained from residents in a country (national) for a year.
This includes those produced by citizens abroad.
Example:
A Chinese citizen who sells smartphones to Indonesia, Well the results of these goods (smartphones) and also services are included in GNP.
Need to note, if the GNP emphasizes the citizenship aspect (nationality) lol yes!!
Formula:
Here is the formula for GNP, there are three kinds, including:
GNP = Income of Indonesian Citizens in domestic + income of Indonesian citizens in overseas.
or
GNP = Income of Indonesian Citizens in overseas - foreigner income in pendapatan domestic.
or
GNP = GDP – NET income on a factor of overseas.
3. NET NATIONAL PRODUCT (NNP) OR NET NATIONAL PRODUCT (PNN)
Definition: the result of a the value of GNP that has been reduced by the depreciation of capital in the production process.
The essence of NNP itself is a concept national income which is seen only from the profit earned.
Because, purpose of NNP itself is to find the net or net value of a production. Like that lol, hihihihi.
Formula:
Here is the formula for finding NNP:
NNP = GNP – Depreciation
4. NET NATIONAL INCOME (NNI) OR NET NATIONAL INCOME
Definition: national income is based on the amount of remuneration obtained by the community as the owner of the factors of production.
Formula:
NNI = NNP – Indirect taxes + subsidies
Information:
- Indirect tax
Indirect taxes must be deducted, do not represent remuneration for factors of production.
Tax money is indeed received by the seller or producer along with the market price of the goods he sells, but the tax money must be submitted to the government.
- Subsidy
It must be added because certain prices are made cheaper than the actual production costs, for example for subsidizing the prices of fertilizers, fuel, or rice.
5. PERSONAL INCOME (PI) OR INDIVIDUAL INCOME
Eits make no mistake, individual income is also included in the national income you know. Here's the explanation..
Definition: This PI calculates the amount of income received by each person.
However, it must be reduced by retained earnings, social security contributions, insurance contributions, and added by transfer or transfer payments (transfer payments) yes.
Formula:
PI = NNI + transfer payment – (retained profit + insurance contribution + social security contribution + company tax)
6. DISPOSABLE INCOME OR REVENUE READY TO SPEND
Definition: income that is ready to be used to buy goods and services along with savings that are channeled into investments.
Eitss.. but must minus direct taxyes.
Direct taxes are taxes whose burden cannot be transferred to others, for example income taxes.
Formula:
DI = PI – Direct tax
Well, that was my friend's explanation about the material for national income. Hooray, now you know how to calculate national income.
And, it turned out to be quite long, hehe. But remember.. you guys have to keep the spirit!1!1! And continue to learn and hone your skills.
I hope the explanation above can help you. Thank you for visiting :)).