Question

Explain the practical or Statistical difficulties involved in the estimation of national income.

Answer 1

national income tax return estimate

Answer 2

Statistical difficulties involved in the estimation of national income are as follows:

1. Housewife's administrations:

It is extremely hard to quantify the administration of the housewife to her relatives.

2. Government expenditures:

One cannot distinguish the government’s expenditure on the consumer goods and capital goods.

3. Value of inventories:

It is highly critical to calculate the values of items such as raw materials, finished goods, and the custody of producers.

4. Absence of information:

The correct information required for estimation of national income isn't accessible. Henceforth the records are not kept up legitimately.

5. Illiteracy:

Some producers are illiterates as result of which they are not aware of the quantity and the output of their work and cannot provide clear calculation data.

6. Income from foreign firms and extra income of the individual:

The income from foreign companies as well as the income earned by doing over work also causes difficulties in calculating the national income of the country.