Which of the following is not a method of estimating national income?
Which of the following is not a method of estimating national income?
The correct option is D Export - import method
The three alternative methods used for
measuring national income are as follows: 1. Value Added Method 2. Income
Method 3. Expenditure Method.
1. Value Added Method:
This is also
called output method or production method. In this method the value added by
each enterprise in the production goods and services is measured. Value added
by an enterprise is obtained by deducting expenditure incurred on intermediate
goods such as raw materials, unfinished goods (purchased from other firms from
the value of output produced by an enterprise.
2. Income Method:
This method
approaches national income from distribution side. In other words, this method
measures national income at the phase of distribution and appears as income paid
and or received by individuals of the country. Thus, under this method,
national income is obtained by summing up of the incomes of all individuals of
a country. Individuals earn incomes by contributing their own services and the
services of their property such as land and capital to the national production.
3. Expenditure Method:
Expenditure
method arrives at national income by adding up all expenditures made on goods
and services during a year. Income can be spent either on consumer goods or
capital goods. Again, expenditure can be made by private individuals and
households or by government and business enterprises.
The three alternative methods used for measuring national income are as follows: 1. Value Added Method 2. Income Method 3. Expenditure Method.
1. Value Added Method:
This is also called output method or production method. In this method the value added by each enterprise in the production goods and services is measured. Value added by an enterprise is obtained by deducting expenditure incurred on intermediate goods such as raw materials, unfinished goods (purchased from other firms from the value of output produced by an enterprise.
2. Income Method:
This method approaches national income from distribution side. In other words, this method measures national income at the phase of distribution and appears as income paid and or received by individuals of the country. Thus, under this method, national income is obtained by summing up of the incomes of all individuals of a country. Individuals earn incomes by contributing their own services and the services of their property such as land and capital to the national production.
3. Expenditure Method:
Expenditure method arrives at national income by adding up all expenditures made on goods and services during a year. Income can be spent either on consumer goods or capital goods. Again, expenditure can be made by private individuals and households or by government and business enterprises.
