Lecture 1

National Income Accounts:
1:Product Approach
2:Income Approach
3:Expenditure Approach
In product approach there are 2 things in it.
1: Market Price
In market price the Sales Tax (GST) is indirectly included in it.
Market Price= Factor price + tax (GST)
2:Factor price
Factor price is the market price excluded the indirect sales tax
The best example of factor price is the barter system used in village, that  if you work for someone then in response he will give you back wheat etc (that is real price) without any tax
Types of Indirect Taxes
1: Regressive Tax
Rich class is less affected in it than that of poor class in this type of tax
2: Progressive Tax
Rich class affected more and poor less in it

• Trickledown theory

According to this theory, Tax on rich people decreases down by the government so that they invest more and thus growth rate may increase

• Import substitution

economic policy adopted in most developing countries from the 1930s to the 1980s to promote industrialization by protecting domestic producers from the competition of imports. Protection—in the form of high tariffs or the restriction of imports through quotas—was applied indiscriminately, often to inherently high-cost industries that had no hope of ever becoming internationally competitive. After the early stages of import substitution, protected new industries tended to be very intensive in the use of capital and especially of imported capital goods—i.e., tangible items such as buildings, machinery, and equipment produced and used in the production of other goods and services.

• Export oriented policy

Export-oriented industrialization (EOI) sometimes called export substitution industrialization (ESI), export led industrialization (ELI), or export-led growth is a trade and economic policy aiming to speed up the industrialization process of a country by exporting goods for which the nation has a comparative advantage.