national income A variety of measures of national income and output are used in economics to estimate total economic activity in a country or region, including gross domestic product (GDP), Gross national income (GNI), net national income (NNI), and adjusted nati ...

accounting, net national income (NNI) is net national product (NNP) minus

indirect tax An indirect tax (such as a sales tax, per unit tax, value-added tax (VAT), excise tax, consumption tax, or tariff) is a tax that is levied upon goods and services before they reach the customer who ultimately pays the indirect tax as a part of ...

es. Net national income encompasses the income of households, businesses, and the government. Net national income is defined as

gross domestic product Gross domestic product (GDP) is a monetary measure of the total market value of all the final goods and services produced and rendered in a specific time period by a country or countries. GDP is often used to measure the economic performanc ...

plus net receipts of

wages A wage is payment made by an employer to an employee for work done in a specific period of time. Some examples of wage payments include compensatory payments such as ''minimum wage'', '' prevailing wage'', and ''yearly bonuses,'' and remune ...

, salaries and

property income Property income refers to profit or income received by virtue of owning property. The three forms of property income are rent, received from the ownership of natural resources; interest, received by virtue of owning financial assets; and profit, ...

from abroad, minus the

depreciation In accountancy, depreciation refers to two aspects of the same concept: first, an actual reduction in the fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wears, and second, the allocation i ...

fixed capital In accounting, fixed capital is any kind of real, physical asset that is used repeatedly in the production of a product. In economics, fixed capital is a type of capital good that as a real, physical asset is used as a means of production which i ...

assets (dwellings, buildings, machinery, transport equipment and physical infrastructure) through wear and tear and obsolescence. It can be expressed as

\mathrm = \mathrm + \mathrm + \mathrm + \mathrm + \left

right Rights are law, legal, social, or ethics, ethical principles of freedom or Entitlement (fair division), entitlement; that is, rights are the fundamental normative rules about what is allowed of people or owed to people according to some legal sy ...

- \left

/math> where denotes consumption, denotes

investment Investment is traditionally defined as the "commitment of resources into something expected to gain value over time". If an investment involves money, then it can be defined as a "commitment of money to receive more money later". From a broade ...

, denotes

government spending Government spending or expenditure includes all government consumption, investment, and transfer payments. In national income accounting, the acquisition by governments of goods and services for current use, to directly satisfy the individual or ...

, and represents net exports (

exports An export in international trade is a good produced in one country that is sold into another country or a service provided in one country for a national or resident of another country. The seller of such goods or the service provider is an ...

minus

imports An importer is the receiving country in an export from the sending country. Importation and exportation are the defining financial transactions of international trade. Import is part of the International Trade which involves buying and receivin ...

: ). This formula uses the expenditure method of national income accounting. When net national income is adjusted for natural

resource depletion Resource depletion occurs when a natural resource is consumed faster than it can be replenished. The value of a resource depends on its availability in nature and the cost of extracting it. By the law of supply and demand, the Scarcity, scarcer ...

, it is called ''Adjusted Net National Income'', expressed as

\mathrm^* = \mathrm - \left

/math> Natural resources are non-critical

natural capital Natural capital is the world's stock of natural resources, which includes geology, soils, air, water and all living organisms. Some natural capital assets provide people with free goods and services, often called ecosystem services. All of t ...

such as minerals. NNI* does not take critical natural capital into account. Examples are air, water, land, etc. For reference, capital (K) is divided into four categories: *

K_m

: manufactured capital (machines, factories, etc.) *

K_h

human capital Human capital or human assets is a concept used by economists to designate personal attributes considered useful in the production process. It encompasses employee knowledge, skills, know-how, good health, and education. Human capital has a subs ...

(workers' skills) *

K_n

: non-critical natural capital (minerals) *

K_h*

: critical natural capital (air, water)

References

{{DEFAULTSORT:Net National Income Gross domestic product

See also

References