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Methods of Measuring National Income

Discuss different methods for measuring National Income or Gross domestic product         

Ans. Methods of Measuring National Income:

Three methods are used to measure national income. They are as follows:

(1) Product method or output method.

(2) Income method.

(3) Expenditure method.

(1) Product Method:

This method is also called method of measuring national income at market prices.

(2) Income method:

If annual monetary rewards of all the factors of production are added up then total will be equal to national income.

National income = Rent of land + Wages of labour + Interest of capital + Profit of entrepreneurs.

 3) Expenditure Method:

If we add the expenditure made on the purchase of goods and services in a

country during one year, we can get national income.

(1) Consumption expenditures.

(2) Investment expenditures.

(3) Government expenditures.

(4) Export minus import.

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