IT IS A PPT RELATING TO ECONOMICS

1. NATIONAL
INCOME AND ITS
MEASUREMENT

2. • National Income measures the total value of goods
and services produced within the economy over a
period of time.
• CSO ( Central Statistical Organisation ) is given the
task of estimating the National Income of India &
publishes its estimates in its publication, Estimates of
National Income.

3. FIGURE: MEASURING NATIONAL
PRODUCT AND NATIONAL INCOME

4. METHODS OF MEASURING NI
• Net output or value added method or product Method
• Factor income or income Method
• Expenditure Method

5. PRODUCT METHOD
• In this method, national income is measured as a flow
of goods and services. We calculate money value of all
final goods and services produced in an economy
during a year. Final goods here refer to those goods
which are directly consumed and not used in further
production.
• In the value of final goods,value of intermediate goods
is already included therefore we donot count value of
intermediate goods in national income otherwise
there will be double counting of value of goods.

6. VALUE ADDED METHOD
• To avoid the problem of double counting we can use
the value added method in which not the whole value
of a commodity but value addition at each stage of
production is calculated and these are summed up to
get national income.

7. FACTOR INCOME METHOD
• Known as income method and factor share method.
• NI= Rent+ Wage +Interest +Profit
• In this method income received by all the basic factors
of production in the production process are summed
up.

8. • The income method measures national income from
the side of payments made to the primary factors of
production in the form of rent ,wage, interest and
profit for their productive services in an accounting
year.

9. STEPS IN INCOME METHOD
1. Obtain Net Domestic Product at Factor cost by
summing up factors payment paid in form of wages and
salary ,rent ,interest and profit by all production units of
all sectors in the country.
2.Add Net Factor Income from abroad in Net Domestic
Product at factor cost to obtain Net National Product at
Factor Cost (NNP at FC ) or national income.

10. EXPENDITURE METHOD
• It is also known as final product method. In this
method total national expenditure is the sum of
expenditure incurred by the society in a particular year.

11. COMPONENTS OF EXPENDITURE
METHOD
• GDP = C + I + G + (X – M)
• C: Household spending(consumption)
• I: Net Domestic Investment Spending
• G: Government spending
• X: Exports of goods and services
• M: Imports of goods and services

12. • Income method and Product method are often
employed for calculating National Income.But
expenditure method is difficult method because of the
reliability of the data.
• Product method is used in Agriculture and Industrial
sector.
• Income method is used to find the contribution of the
service sector

13. THANK YOU