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Aggregates of National
Income to Measure the
Value of Goods and
Services
bySmritiChand

Aggregates of National Income to Measure the

Value of Goods and Services!
In an economy, various goods and services are
produced by different productive units during a
period of one year. Such goods and services cannot be
added together in terms of quantity (as we cannot add
5,000 tonnes of wheat + 10,000 mobile phones + 7,000
machines and so on). Therefore, these are expressed in
terms of money.
There are many aggregates in national income to
measure the value of goods and services in terms of
money. Let us start with Gross Domestic Product at
Market Price (GDPMP).

i.GrossDomesticProductatMarketPrice
(GDPMP):
It refers to gross market value of all final goods and
services produced within the domestic territory of a
country during a period of one year.
1.Gross in GDPMP signifies that no provision has

been made for depreciation, i.e. it includes

depreciation.
2.Domestic in GDPMP signifies that it includes goods
and services produced by all units located within the
domestic territory (irrespective of fact whether
produced by residents or non-residents).
3. Market Price in GDPMF signifies that it includes
amount of indirect taxes paid and excludes amount of
subsidy received, i.e. it shows that net indirect taxes
(NIT) have been included.
4.Product in GDPMP signifies that only final goods
and services have to be included.
By making adjustments in GDPMP, we can derive
other aggregates.

ii.GrossDomesticProductatFactorCost
(GDPFC):
It refers to gross money value of all the final goods and
services produced within the domestic territory of a
country during a period of one year.
GDPFC = CDPMP Net Indirect Taxes

iii.NetDomesticProductatMarketPrice
(NDPMP):
It refers to net market value of all the final goods and
services produced within the domestic territory of a
country during a period of one year.
NDPMP = GDPMP Depreciation

iv.NetDomesticProductatFactorCost

(NDPFC):
It refers to net money value of all the final goods and
services produced within the domestic territory of a
country during a period of one year.
NDPFC = GDPMP Net Indirect Taxes Depreciation
NDPFC is also known as Domestic Income or Domestic
factor income.
Relationship between Four Domestic Concepts:
GDPMP, GDPFC, NDPMP and NDPFC are four Domestic
concepts. The term Domestic signifies that
contribution of only those producers (whether
resident or non-resident) is to be included who are
within the domestic territory of the country.

v.GrossNationalProductatMarketPrice
(GNPMP):
It refers to gross market value of all the final goods
and services produced by the normal residents of a
country during a period of one year.
GNPMP = GDPMP + Net factor income from abroad
It must be noted that GNPMP can be less than GDPMP
when NFIA is negative. However, GNPMP will be more
than GDPMP when NFIA is positive.

vi.GrossNationalProductatFactorCost
(GNPFC):
It refers to gross money value of all the final goods and
services produced by the normal residents of a
country during a period of one year.
GNPFC = GNPMP Net Indirect Taxes

vii.NetNationalProductatMarketPrice
(NNPMP):
It refers to net market value of all the final goods and
services produced by the normal residents of a
country during a period of one year. NNPMP = GNPMP
Depreciation

viii.NetNationalProductatFactorCost
(NNPFC):
It refers to net money value of all the final goods and
services produced by the normal residents of a
country during a period of one year.
NNPFC = GNPMP Net Indirect Taxes Depreciation
It must be noted that NNPFC is also known as National
Income.
Relationship between Four National Concepts:
GNPMP, GNPFC, NNPMP and NNPFC are four National
concepts. The term National signifies that production
of only normal residents of the country is to be
included even if they are outside the domestic
territory of the country.

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