what is national debt interest ? what is private income and personal income, explain with formula and example ? plz give the answers expert ?
National debt interest is the interest paid by the government on loans to meet its consumption and administrative expenditure.
Private income is the income of private sector from all the sources that are earned (income payment) as well as unearned(transfer payment)
pvt. income = NDP at FC + NFIA +National Debt Interest + current transfer income income from domestic product of public sector
Personal income is the total income received by a person
personal income = Pvt. Income -corporation tax - undistributed profit
personal income= NI -Income from domestic product from public sector - corporation tax - undistributed profit + transfer incomes
National Debt Interest would NOT be included in the calculation of national income because it is a transfer payment...a kind of reward of saving and does not add to the productive goods
The tax on sale of goods and services is called sales tax.
Excise duty is inland tax on production..i.e. within the country..they are imposed on certain goods and services..a kind of license..
Excise duty is on production of goods whereas sales tax is on sale of goods.
they both are indirect taxes so they will be taken into CONSIDERATION while calculating the national income..
Value added mtd or output or production mtd includes the value of total output at market price.
It gives us GDP at Market Price which needs to be converted into NNP at Factor Cost or NI.
GDP at MP = value of output - value of intermediate goods
here value of output = sales +closing stock - opening stock.
It can also be calculated when in question the value of output of each sector in the economy is given - value of intermediate goods of each sector.
Once you get GDP at MP then
NNP at FC = GDP at MP - Net indirect taxes - depreciation + net factor income from abroad.
NET INDIRECT TAXES = indirect taxes - subsidies.
This will b you national income through value added method.
national debt interest means:- the govt take loan from people and this income is not estimated in national income ..
national income has two parts
1. Private income
private income is income which is earned by factor as well as tarnsfer payements. it is the part of private sector