METHODS OF MEASURING NATIONAL INCOME

 METHODS OF MEASURING NATIONAL INCOME

There are three types of methods, which are as follows

i)  Product Methods    In this method, the net value of final goods and services produced in a country during a year is obtained, which is called Total Final Product.  This represents Gross in Domestic Product(GDP).

ii)  Income Method      In this method, a total of net income earned by working people in different sectors and commercial enterprises is obtained.

iii)  Consumption Method    It is also called expenditure method.  Income is either spent on consumption or saved.  Hence, national income is the addition of total consumption and total savings.  In India,  a combination of production method and income method is used for estimating national income.