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Distinguish between:

(i) Gross Domestic Product at market price and Net National Product at factor cost. 

(ii) Personal income and personal disposable income.

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(i) GDPmp is the money value of all final goods and services produced in the domestic territory of a country in a year. It includes consumption of fixed capital and indirect taxes. It doesn’t include Net factor Income from abroad whereas NNPfc is the sum total of factor income earned by the normal residents of a country in a year. It excludes depreciation but includes net factor income from abroad. It doesn’t include net direct taxes.

(ii) GDPmp = NNPfc – NFIA + Depreciation + Net indirect tax 

NNPfc = GDPmp – depreciation + NFIA – Net indirect tax

Following is the difference between Personal income and Personal Disposable Income (PDI).

Personal income is the income actually received by persons from all sources in the form of current transfer payments and factor incomes whereas PDI is the personal income remaining with individuals after paying direct personal taxes and other fees and fines to the government.

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