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Question
Distinguish between:
National income at market prices and national income at factor cost
Solution
| Basis | National income at market price (NNPMP) | National income at factor cost (NNPFC) |
| 1. Definition | It refers to the total market value of all the final goods and services produced by the normal residents of a country both within the domestic territory as well as outside the country. | It refers to the aggregate of all factor incomes earned by those factors of production that are normal residents of a country both within the domestic territory as well as abroad. |
| 2. Indirect taxes and subsidies | It takes into account the impact of indirect taxes and subsidies. | It does not take into consideration the impact of subsidies and indirect taxes. |
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