National Income refers to the total value of all goods and services produced within a country over a specific period, usually a year. Per Capita Income is the national income divided by the population, showing the average income per person.

GDP ≡ Sum total of gross value added of all the firms in the economy

GNP ≡ GDP + Net factor income from abroad

Net factor income from abroad= Factor income earned by the domestic factors of production employed in the rest of the world – Factor income earned by the factors of production of the rest of the world employed in the domestic economy

NNI or NNP (at market prices) ≡ GNP – Depreciation

Net indirect taxes ≡ Indirect taxes – Subsidies

Personal Income (PI) ≡ NI – (Undistributed Profits + Corporate Tax) – Net interest payments made by households + Transfer payments to the households from the government and firms

NI, which is earned by the firms and government enterprises, a part of profit, is not distributed among the factors of production. This is called Undistributed Profits (UP).

Corporate Tax, which is imposed on the earnings made by the firms, will also have to be deducted from the NI, since it also does not accrue to the households.

Personal Disposable Income (PDI ) ≡ PI – Personal tax payments – Non-tax payments.