Net indirect tax is the difference between indirect tax and subsidy. GNP at fc = NDP at fc + NFIA + depreciation That stands for GNP = Consumption + Investment + Government + X (net exports) + Z (net income earned by domestic residents from overseas investments minus net income earned by foreign residents from domestic investments). Government Surplus: Or. NNI at Factor Cost = NNI at MP plus Subsidies minus Indirect Taxes. Formula For Net National Product/National Income: NNP at Market Price = GNP at Market Price - Depreciation Depreciation Allowance and Maintaining Capital Intact. Here a question can be asked as to what we actually mean by depreciation allowance and maintaining capital intact; (the words which we have used in explaining NNP). While taxes increase the market price of commodities, subsidy decreases the market price. The money value of cloth at factor cost would be equal to its market price plus the subsidies paid on it. GNP produces crucial information on manufacturing, savings, investments, employment, production outputs of major companies and other economic variables. Formula for Gross National Product . Where, GDP = Gross Domestic Product . The formula to calculate the components of GNP is Y = C + I + G + X + Z . Gross national product is the sum of total factor incomes earned by normal residents of a country from domestic territory and rest of the world along with depreciation during the year. The general formula used for Gross National Product is: GNP = GDP + Net factor income from abroad . 3 4. Policymakers use this information in preparing policy papers that legislators use to make laws. GNP AT FACTOR COST = GNP AT MARKET PRICE-NET INDIRECT COST. Why is GNP required? Policymakers rely on Gross National Product as one of the important economic indicators. The government applies the GNP information in determining the resident’s total income and making policies about savings and policies. Indirect tax is the tax imposed on production and sale of the commodities. GNP at fc = NNP at fc + Depreciation. GNP MP = GDP MP + Net factor income from abroad Remember, GDP is a territorial concept because it includes whatever is produced within the domestic territory of a country irrespective of whether the producer is a resident or a non-resident (i.e., foreigner). Net factor income from abroad = income earned in foreign countries by the residents of a country – income earned by non-residents in that country .
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