Question

In your view, mention any two difficulties in the measurement of national income.

Answer 1

This difficulty is of two types

1)Conceptual problems

2)Practical problems

Population of our country is large (about 1.3 billion) this makes the collection of data a huge task.The sheer amount of workers gaining income through formal and informal sources itself is large.

People earn through many ways. some may earn more and some less. Some people refuse to show their income,some may also misrepresent their income. Also the income earned by NRIs are to be calculated.The Lack of reliable data adds to the problem

Illegal income is not reported by people.

Answer 2

In Macroeconomics,National Income refers to the measurement of the market value of all the goods and services produced in an economy within a certain period of time,usually an year,as same as GDP(Gross Domestic Product)

Explanation:

Major difficulties of measuring National Income:-

1. In a big country such as India or USA,accurate national income estimation is very much practically difficult due to constraints in data collection and ensuring data reliability.In a geographically large country,it is really a challenge to collect primary data on the production level of all the goods and services from all corners of the country and accurately calculate their market value or the total income generated from these goods and services.In many cases,in interior parts of many country,the traders,manufacturers and producers of various goods and services do not carry any record of their income or profit level and hence,much of the production data are missing.
2. In many instances,the government officials are not able to accurately estimate the total employed section of the population in any country.In many cases,many individuals are not involved in any sustainable or continuous employment or job and may work off season.Therefore,according to government record,these individuals might be classified as unemployment,but in fact they are not.