National Income
Chapter 2: Chapter 2 · ECONOMICS · EN medium
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All goods and services produced in the country must be counted and converted against money value during a year. Thus, whatever is produced is either used for consumption or for saving. Thus, national output can be computed at any of three levels, viz., production, income and expenditure. Accordingly, there are three methods that are used to measure national income. . Production or value added method . Income method or factor earning method . Expenditure method And if these methods are done correctly, the following equation must hold Output = Income = Expenditure GDP deflator = Nominal GDP x Real GDP National Income This is because the three methods are circular in nature.
📖 Class 12 Economics English Medium 2024 Edition www.tntextbooks.in · Page 28
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All goods and services produced in the country must be counted and converted against money value during a year. Thus, whatever is produced is either used for consumption or for saving. Thus, national output can be computed at any of three levels, viz., production, income and expenditure. Accordingly, there are three methods that are used to measure national income.
. Production or value added method . Income method or factor earning method . Expenditure method And if these methods are done correctly, the following equation must hold Output = Income = Expenditure GDP deflator = Nominal GDP x Real GDP National Income This is because the three methods are circular in nature.
It begins as production, through recruitments of factors of production, generating income and going as incomes to factors of production.
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