National Income Aggregates

Lesson

Part 1 — eight aggregates, the three adjusting items, and national and per capita income.

In this lesson you will

Define depreciation, net indirect taxes and net factor income from abroad
Convert between gross and net, market price and factor cost, and domestic and national aggregates
Explain domestic territory and normal residents
Calculate national income and per capita income

Part 1 at a glance

Concept

Three items that link the aggregates

Every aggregate name has three choices: gross or net, market price or factor cost, domestic or national.

Table of the three adjusting items: depreciation turns gross into net; net indirect taxes (indirect taxes minus subsidies) turn market price into factor cost; net factor income from abroad turns domestic into national
Item	What it is	Use
Depreciation	Fixed capital used up by wear and tear and expected obsolescence	Gross − depreciation = net
Net indirect taxes	Indirect taxes − subsidies	Market price − net indirect taxes = factor cost
Net factor income from abroad	Factor income received from abroad − factor income paid abroad	Domestic + NFIA = national

Diagram

Combine the three choices and you get eight totals.