1. What is Net Domestic Product At Factor Cost?

Net Domestic Product At Factor Cost is an economic indicator that measures the value of all goods and services produced within a country's borders during a specific time period, excluding indirect taxes and including subsidies.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( NDP_{fc} \) — Net Domestic Product At Factor Cost
• \( NDP_{mp} \) — Net Domestic Product At Market Price
• \( NIT \) — Net Indirect Taxes (Indirect Taxes minus Subsidies)

Explanation: This formula calculates the value of domestic production at factor cost by subtracting net indirect taxes from the market price valuation.

3. Importance of NDP_fc Calculation

Details: NDP_fc provides a more accurate measure of the income generated by factors of production within an economy, as it excludes taxes and includes subsidies that affect market prices.

4. Using the Calculator

Tips: Enter Net Domestic Product At Market Price and Net Indirect Taxes in currency units. Both values must be non-negative numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the difference between NDP_fc and NDP_mp?
A: NDP_mp measures production at market prices, while NDP_fc measures production at factor cost by excluding net indirect taxes.

Q2: How are net indirect taxes calculated?
A: Net Indirect Taxes = Indirect Taxes - Subsidies. It represents the net tax burden on production and consumption.

Q3: Why is NDP_fc important for economic analysis?
A: NDP_fc provides a clearer picture of the income actually received by factors of production (land, labor, capital, entrepreneurship) in an economy.

Q4: What time period does this calculation typically cover?
A: This calculation is usually done for a specific accounting period, typically one fiscal or calendar year.

Q5: How does depreciation affect this calculation?
A: Both NDP_mp and NDP_fc are net concepts, meaning they already account for depreciation of capital assets.