20. describe the various methods of calculating the national income.
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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.
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
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.
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.
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
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.
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