measurement of income
DESCRIPTION
TRANSCRIPT
MEASUREMENT ofNATIONAL
INCOME of an economy
What is National Income?
NATIONAL INCOME
money value of final outputs which comprises of goods and services produced by a country during a year.
GDP & GNP
GDP = Gross Domestic Product, is the value of all final goods and services produced by all sectors of the economy the citizens or foreign sectors within a country.
GNP = Gross National Product, is the value of all final goods and services produced by all citizens of a country (within a country or abroad).
METHODS OF MEASURING NATIONAL INCOME NI can be measured using 3 common method:
a) Income method
b) Output method
c) Expenditure method
Irrespective of which approach used in calculating NI, will give us the same value
I) INCOME METHOD
• National Income is the total money values of all incomes received by productive persons and enterprises in the country during the year.
• It is the total income of all factors of production including the income of self-employed person, labourers, capital and land .
NI= wages +rents + profits + interest of capital.
II) OUTPUT METHOD
1. Also known as value added method.
2. 3 stages:• estimating gross value of domestic o/p• determining material cost• deducting these cost from gross value
III) EXPENDITURE METHOD2 approaches used here:
a) Sum of all the money expenditures at market price.b) Sum of value of all the products finally disposed off.
MEASUREMENT OF NATIONAL INCOME IN INDIA
• Input method is used for service sectors
• Output method is used for commodity producing sectors
• National in come divided into 15 sectors
Ashita Sethi100906022