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.