National income is defined as the total money value of all final goods and services produced in a country in a year. It includes incomes from all sectors - labor, capital, land, and entrepreneurship. There are several methods to measure national income, including the income method, expenditure method, and production method. The income method sums all factor incomes, the expenditure method sums individual and government expenditures, and the production method sums outputs across all sectors. National income estimates are useful for measuring economic growth, standard of living, investment patterns, and the success of national planning.

1. Created by :- Rahul Bisen
MU20MBA036
01/05/2021
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2. WHAT IS NATIONAL INCOME ?
 National Income is the money
value of all goods and services
products in a country during a
year. It includes income from all
the productive sectors.
 The term ‘money value’ means
the value estimated at the
current price of the goods and
services.
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Measurement Of National Income

3. METHODS OF MEASUREMENT OF
NATIONAL INCOME
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Measurement Of National Income

4. The sum total of products produced in all sectors is the
total output of the nation. The next step is to find out the
value of these products in terms of money.
The money sent by Indian citizens working abroad is
also added to this. Now we get the gross national
income.
GNI(Gross National Income) =Money value of total
goods and services + Income from abroad.
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Measurement Of National Income

5.  Under this method, national income is measured as a flow of
factor incomes. There are generally four factors of production
labour, capital, land and entrepreneurship. Labour gets wages
and salaries, capital gets interest, land gets rent and
entrepreneurship gets profit as their remuneration.
 Besides, there are some self-employed persons who employ their
own labour and capital such as doctors, advocates, CAs, etc.
Their income is called mixed income. The sum-total of all these
factor incomes is called NDP at factor costs.
GNI = Rent + Wage + Interest + Profit +Income from
abroad
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Measurement Of National Income

6. Household or consumer expenditure on consumption
goods.
 Firm or producer expenditure of capital goods. Also
known as gross investment.
 Government expenditure on goods and services,
excluding transfer payment. Expenditure on exports and
imports.
 GNI= Individual Expenditure +Government
Expenditure.
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Measurement Of National Income

7.  Useful in measuring the standard of living of a nation through
estimating per capita income of the nation.
 Time series comparison (year to year). Measuring growth of the
economy.
 Comparison between two or more countries can be made.
 Useful in revealing the expenditure pattern of a country.
 Useful in measuring the level and pattern of investment.
 Balance of payments pattern.
 National income as an indicator of success or failure of national
planning.
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Measurement Of National Income

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Measurement Of National Income