Depreciation & Capital Consumption

Reduction in the value of an asset is called \(depreciation\) or \(capital\ consumption\).

\[ Fixed\ Capital\ Consumption\ (FCC) = Gross\ (G) - Net\ (N) \]

Net Primary Income from Abroad

Net primary income represents the difference between income earned by nationals abroad and income earned by foreigners in the country.

\[ Net\ Primary\ Income\ = Income\ Earned\ by\ Nationals\ Abroad - Income\ by\ Foreigners\ in\ the\ Country \]

Or alternatively:

\[ Net\ Primary\ Income\ (NPI) = National\ (N) - Domestic\ (D) \]

Secondary Income or Net Transfers

Net transfers represent secondary income and are calculated as the difference between transfers received and transfers paid.

\[ Net\ Secondary\ Income\ (NSI) = Net\ Transfers\ (NT) = Transfers\ received - Transfers\ paid \]

Or:

\[ Net\ Transfers\ (NT) = Disposable\ Income\ (DI) - Income\ (I) \]