Sociology, asked by anweshasingh298, 2 months ago

distinguish between the different approaches to measurement of national income

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Answered by raheelbaqtawa
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Answer:

Explanation:

We have three different methods to measure the national income, because we can measure the income at three different stages of economic activities due to circular flow of income.

1;Production: production of goods and services generates income to the factors of production (land, labour, enterprise, capital) . So, we can measure income as value added in production through Product method or Value added method.

2;Ditribution : after production, the value of produced goods and services is distributed among the factors of production in the form of factor income (rent, salary, profit etc. ). Sum of this factor income becomes national income under the Income method.

3;Disposition : the income earned by the factors would be spent in the form of consumption expenditure to buy goods and services. So the sum of this expenditure again shows the national income by Expenditure method.

As the income moves between these three phases continously, we can measure income at different phases and they give the same result of national income. So we have 3 methods to measure the national income.

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