Question

Distinguish between gross national disposable income and net national disposable income.

Answer 1

Gross National Disposable Income (GNDI) refers to the total of a country’s gross national product (GNP) at market prices, along with net current transfers received from abroad. It indicates the market value of all final goods and services produced by the residents of a country over a year, including the net current transfers from other countries.

On the other hand, Net National Disposable Income (NNDI) is the total of net national income at market prices, along with net current transfers received from the rest of the world. The key difference between NNDI and GNDI is that NNDI accounts for depreciation, which is subtracted from GNDI.

Thus, the relationships are

• GNDI = GNP_mp + Net current transfers from the rest of the world
• ∴ NNDI = GNDI − Depreciation