Question

Explain Income Method Of Calculating National Income

Answer 1

While calculating National Income the value of only finished goods is added because the finished products already contains value of intermediate goods.

Explanation:

So just the total volume of goods and services produced in each sector is calculated along with their prices and then the national incomes is estimated.

so hence the result.

Answer 2

The income method of calculating National Income includes the aggregation or summation of all the factor payments incurred during the production of goods and services in any economy or country.

Explanation:

• The income method of National Income calculation basically includes all the incomes and payments generated by the factors/inputs of production such as land,labor,capital or physical factors or inputs of production,dividends and income of business or firm owners and so forth.These are known as Factor Payments or Factor Income in Economics.
• Examples of factor payments or income include land rent,wages or salaries paid to laborers and workers,interest payments on capital,profit and dividends earned by business or plant owners etc.
• Hence,Income method of calculating National Income basically takes an aggregate or addition of all the factor payment or income generated in the economy due to the production of goods and services in an economy or country within a particular period of time.
• The outcome of the Income Method of calculating National Income is also popularly known as Domestic Income or Net Domestic Product at the factor cost.