Q. What is national income? What are the different methods of measuring national income?
National income is the aggregate money value of the annual flow of final goods and services in the economy during a given period. Paul Studenski writer "National income is both a flow of goods and services and a flow of money income. Then National income represents the aggregate value of final products. Methods to calculate national income are Three methods A) Product method: In this two approaches are, i. Final Product approach: "sum total of market value of all final goods and service produced by all productive units in the domestic economy in an accounting year. ii. Value Added approach: Net value added at factor cost by all the producing units during an accounting year within the domestic territory in summed up. B) Income method: Under this method, National income is calculated by summing up of factor incomes of all the normal residents of a country earned within and outside the country during a period of one year. N.I = compensation of employees + operating surplus + Net factor income from abroad C) Expenditure method: By considering private consumption expenditure, investment expenditure, they calculate GDP Then, GDP = C + I + G + (X - M)