Tuesday, 25 February 2020

Calculation of National Income

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Calculation of National Income


There are three different methods of measuring national income. These are product
approach, income approach and expenditure approach.
Under product approach, the sum of net value of goods and services produced at market
prices is found.
Income approach is also known as the income-distributed method. According to this
method, the incomes received by all the basic factors of production used in the production
process are summed up.
Expenditure method is known as the final product method. Under this method, the total
national expenditure is the sum of the expenditure incurred by the society in a particular
year.
In India, the national income estimates are prepared by the Central Statistical Organisation.


Expenditure approach: The total national expenditure is the sum of the expenditure incurred by
the society in a particular year.
Government expenditure: The sum of expenditure on consumption and capital goods by the
government.
Income approach: The incomes received by all the basic factors of production used in the
production process.
Product approach: The sum of net value of goods and services produced at market prices.

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