Question

Which of the following are the methods of calculating national income?

• A. Product Method
• B. Income Method
• C. Expenditure Method
• D. All of the above

Answer 1

Answer: (D)

All of the above

Three methods of calculating national income are product method, income method and expenditure method

• Product method: In this method, national income is measured as money value of all final goods and services produced in an economy during a year. Final goods here refer to those goods which are directly consumed and not used in further production process.
  
• Income method: According to this method income is measured as a flow of factors income. There are generally four factors of production labour, capital, land and entrepreneurship. Labour gets wages and salaries, capital gets interest, land gets rent and entrepreneur gets profit as their remuneration.
  
• Expenditure method: National income is measured as a flow of expenditure. t includes the sum total of private consumption expenditure, government consumption expenditure, gross capital formation (Government and private) and net exports (export-import).