This is so because what is cost for the firms is income for the factors. Here, we have used the following data for the calculation of this formula. If depreciation charge is added to the Net Domestic product at factor cost, it is called gross domestic product of factor cost. Formula: GDP (gross domestic product) at market price = value of output in an economy in the particular year – intermediate consumption at factor cost = GDP at market price – depreciation + NFIA (net factor income from abroad) – net indirect taxes. 100, which is given to different factors of production as wages, rents, interest and profits. NDP at factor cost is equal to the value added at factor cost. Where, Nominal GDP = GDP evaluated using that current market prices; Real GDP = Inflation adjusted measure of all goods and services produced by an economy in a year; How to Calculate GDP Deflator?

Definition. Net domestic product at factor cost is also called net domestic income. Gross domestic product at factor cost includes depreciation of capital assets.

This allows the effect of any subsidy or indirect tax to be removed from the final measure. The conceptual difficulty with gross value added at factor cost is that there is no observable set of prices such that gross value added at factor cost is obtained directly by multiplying this set of prices by the sets of quantities of outputs. Thus GDP at factor cost = Net Domestic product at Factor Cost + Depreciation. Real Gdp At Factor Cost: Real GDP is the nominal GDP after adjusting for any price changes attributable to either inflation or deflation. GDP or Gross Domestic Product can be expressed in both market price and factor cost values.

Factor cost or national income by type of income is a measure of national income or output based on the cost of factors of production, instead of market prices. Let us presume that the actual cost of producing a certain output is Rs. Formula of GDP Deflator. The Government imposes taxes worth Rs. Hence, net national income at factor cost shows the income actually received by the factors of production. The concept of factor cost is focusing on the cost incurred on the factor of production.

Income Approach. Description: Nominal GDP or the GDP at current price can present a distorted picture of the actual growth in GDP owing to price changes.


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