Measurement of national income.
We can measure the national income by following three method.
1. National income at market price
2. National income at factor cost
3. Expenditure method
First of all we discuss
National income at market price..
According to this method we add up the market value of all
goods and services produce in a country during a one year.
It is also called national income. All the goods either these are agriculture
Industrial and minerals are in include the output.
All the service which are rendered by the doctors, teachers and clerk are include in the total output.
So the value of these goods and services in term of money is called national income..
NI=GNP-DA-indirect tax+subsidies
Income method or national income at factor cost
According to this method we sum up the remuneration received
by the four factors of production (land, Labour, capital, organization)
during a year..
In Other words.
Expenditure method
If we add up the all expenditure incurred by individual by firms and
and by the government agencies on goods and services which are produced
In the country, we can get the national income to purchases these goods and services
there would be need of sufficient amount which may be equal to the market price.
so to calculate the market price if we calculate the total expenditure it will be equal to the
national income.
Following item are include in it.
1. Personal consumption expenditure
2. Gross domestic private investment
3. Govt expenditure in goods and services
4. Gross domestic public investment
5. Net foreign investment
6. Net export
If we sum up the above total expenditure it will be called GNP.
