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Eco. 102 (Online Discussion/Quiz–22/01/2022—Methods of measuring the National Income)

The National Income is the total amount of income accruing to a country from economic activities in a year’s time. It includes payments made to all resources either in the form of wages, interest, rent, and profits. The progress of a country can be determined by the growth of the national income of the country.

You are therefore required to list and deeply explain the various methods of measuring the National Income,

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Comments 383

  1. Avatar Chukwu Gift Onyinyechi says:

    Chukwu Gift Onyinyechi
    2016/234636
    Economics

    Various methods of measuring the national income are:-
    Product Method
    Income Method and
    Expenditure Method

    1. Product Method

    Under product method, we add the values of output produced or services rendered by the different sectors of the economy during the year in order to calculate the National Income.

    In this method, we include only the value added by each firm in the production process in the output figure.
    Therefore, we use the value-added method. The value-added output of all the sectors of the economy is the GNP at factor cost.

    2. Income Method

    Under the income method, we will add all the incomes from employment and ownership of assets before the taxation received from all the production activities in an economy.

    Hence, it is also the Factor Income method. We also need to add the undistributed profits of the private sector and the trading surplus of the public sector corporations.

    But we need to exclude items not arising from productive activities such as sickness benefits, interest on the national debt, etc.

    3. Expenditure Method
    Expenditure method measures the total domestic expenditure of the economy. It consists of two elements which are; Consumption expenditure and Investment expenditure.

    Consumption expenditure includes consumption expenditure of the household sector on goods and services and consumption outlays of the business sector and public authorities.

    Investment expenditure refers to the expenditure on the making of fixed capital such as Plant and Machinery, buildings, etc.

  2. Avatar Nwizugbe Vitalis Tochukwu.2020/249396 says:

    Name: Nwizugbe Vitalis Toochukwu
    Reg no: 2020/249396
    Course: Eco 102

    Eco 102
    METHODS OF MEASURING NATIONAL INCOME
    Output/Product Approach:
    This measures national income in terms of the monetary value of all goods and services produced by the various economic units in a year.
    By economic Units we means individuals: firms and governments. Here, only all the final goods and services are included while intermediary goods and services are ignored.

    Income Approach:.
    This measures all the income received by economic units within a year for their participation in production. That is addition of all incomes received by all factors of production that partake in production Transfer payments are ignored. It is given as:
    Y – f(w.i.m. r)
    Where Y – National income
    W – Wages
    I. – Interest Profil
    R- Rent

    Expenditure Approach:
    It measures the total expenditure of goods and services by economic units in a country within a year it is given as thus:
    Y – C C+1+G+ (x-m)-1
    Where Y – National income
    C – Private consumption expenditure
    G = Government expenditure on good and services
    X= Export
    M – import
    T – Taxes
    D-. Depreciation or capital consumption allowance
    Note: (x-m) -Net export

  3. 1 Product Method: Under this method, we add the outputs of values produced or services rendered by the different sectors of the economy during the year in order to calculate the national income. In this method, we include only the value added by each firm in the production process in the output figure.

    2. Income Method: Under this method, we add all the incomes from employments and ownership of assets before taxation received from all the production activities in the economy. Thus, it is also the Factor income method. We also need to add the undistributed profits of the private sector and the trading surplus of the public sector corporations. However, we need to exclude items not arising from productive activities such as sickness benefits, interest on the national dentist etc.

    3 Expenditure Method: This method measures the total domestic expenditure of the economy. It consists of two elements: consumption expenditure and investment expenditure. Consumption expenditure involves consumption expenditure of the household sectors on goods and services and consumption outlays of the business sector and public authorities. Investment expenditure refers to the expenditure on the makings of fixed capital such as Plant and Machinery, buildings etc

  4. Avatar Ikeh Nnamdi Samuel 2020/246207. Economics/psychology says:

    Various methods of measuring the national income are:-
    Product Method
    Income Method and
    Expenditure Method

    1. Product Method

    Under product method, we add the values of output produced or services rendered by the different sectors of the economy during the year in order to calculate the National Income.

    In this method, we include only the value added by each firm in the production process in the output figure.
    Therefore, we use the value-added method. The value-added output of all the sectors of the economy is the GNP at factor cost.

    2. Income Method

    Under the income method, we will add all the incomes from employment and ownership of assets before the taxation received from all the production activities in an economy.

    Hence, it is also the Factor Income method. We also need to add the undistributed profits of the private sector and the trading surplus of the public sector corporations.

    But we need to exclude items not arising from productive activities such as sickness benefits, interest on the national debt, etc.

    3. Expenditure Method
    Expenditure method measures the total domestic expenditure of the economy. It consists of two elements which are; Consumption expenditure and Investment expenditure.

    Consumption expenditure includes consumption expenditure of the household sector on goods and services and consumption outlays of the business sector and public authorities.

    Investment expenditure refers to the expenditure on the making of fixed capital such as Plant and Machinery, buildings, etc.

  5. Avatar Nwodo Vitalis Chibuike says:

    1. Product Method:
    product Method has to do with the addition of the values of output produced or services rendered by the different sectors of the economy during the year in order to calculate the National Income.
    Only the value added by each firm in the production process in the output figure is included.

    2. Income Method:
    In income method, we add all the incomes from employment and ownership of assets before taxation received from all the production activities in an economy.
    Also known as the Factor Income method. We also need to add the undistributed profits of the private sector and the trading surplus of the public sector corporations, thereby excluding the items not arising from productive activities such as interest on the national debt, sickness benefits, etc

    3. Expenditure Method:
    Expenditure method is used to measure the total domestic expenditure of the economy. It consists of two elements, viz. Consumption expenditure and Investment expenditure.

    Consumption expenditure includes consumption expenditure of the household sector on goods and services and consumption outlays of the business sector and public authorities.
    Investment expenditure refers to the expenditure on the making of fixed capital such as Plant and Machinery, buildings, etc.

  6. Avatar ONUKARIGBO OGECHUKWU IAN-COLLINS says:

    ONUKARIGBO OGECHUKWU IAN-COLLINS
    2020/247554
    therealiancollins007@gmail.com

    The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method.

    1. 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 process.

    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.

    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.

    The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.

    2. Income Method:

    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.

    3. Expenditure Method:

    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  7. Avatar Okeze Ezinne Pretty says:

    NAME: Okeze Ezinne Pretty
    REG NUMBER: 2016/234314
    DEPARTMENT: ECONOMICS
    EMAIL: ezinnepretty1@gmail.com
    ECO 102

    You are therefore required to list and deeply explain the various methods of measuring the National Income,

    ANSWER;
    Methods of Measuring National Income

    The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method.

    1. 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 process.
    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.

    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.
    The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.

    2. Income Method:
    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.

    3. Expenditure Method:
    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  8. Avatar AMAEFULE RAPHEAL IZUCHUKWU says:

    NAME: AMAEFULE RAPHEAL IZUCHUKWU
    REG NO:2020/246139
    DEPARTMENT: ECONOMICS
    Methods of Measuring National Income
    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.
    1. Production or value added method
    2. Income method or factor earning method
    3. Expenditure method

    And if these methods are done correctly, the following equation must hold.
    Output = Income = Expenditure
    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.

    1. Product Method
    Product method measures the output of the country. It is also called inventory method. Under this method, the gross value of output from different sectors like agriculture, industry, trade and commerce, etc., is obtained for the entire economy during a year. The value obtained is actually the GNP at market prices. Care must be taken to avoid double counting.
    The value of the final product is derived by the summation of all the values added in the productive process. To avoid double counting, either the value of the final output should be taken into the estimate of GNP or the sum of values added should be taken.

    Precautions
    The product method is followed in the underdeveloped countries, but it is less reliable because the margin of error in this method is large. In India, this method is applied to agriculture, mining and manufacturing, including handicrafts.
    1. Double counting is to be avoided under value added method. Any commodity which is either raw material or intermediate good for the final production should not be included. For example, value of cotton enters value of yarn as cost, and value of yarn in cloth and that of cloth in garments. At every stage value added only should be calculated.
    2. The value of output used for self consumption should be counted while measuring national income.
    3. In the case of durable goods, sale and purchase of second hand goods (for example pre owned cars) should not be included.

    2. Income Method (Factor Earning Method)
    This method approaches national income from the distribution side. Under this method, national income is calculated by adding up all the incomes generated in the course of producing national product.

    Steps involved:
    1.        The enterprises are classified into various industrial groups.
    2.        Factor incomes are grouped under labour income, capital income and mixed income.
    a.        Labour income – Wages and salaries, fringe benefits, employer’s contribution to social security.
    b.        Capital income – Profit, interest, dividend and royalty
    c.         Mixed income – Farming, sole proprietorship and other professions.
    3.        National income is calculated as domestic factor income plus net factor incomes from abroad. In short,
    Y = w + r + i + π + (R-P)
    w = wages, r = rent, i = interest, π = profits,
    R = Exports and P = Imports

    This method is adopted for estimating the contributions of the remaining sectors, viz., small enterprises, banking and insurance, commerce and transport, professions, liberal arts and domestic service, public authorities, house property and foreign sector transaction.
    Data on income from abroad (the rest of the world sector or foreign sector) are obtained from the account of the balance of payments of the country.
    Precautions
    While estimating national income through income method, the following precautions should be taken.

    Items not to be included:
    1. Transfer payments are not to be included in estimation of national income as these payments are not received for any services provided in the current year such as pension, social insurance etc.
    2. The receipts from the sale of second hand goods should not be treated as part of national income as they do not create new flow of goods or services in the current year.
    3. Windfall gains such as lotteries are also not to be included as they do not represent receipts from any current productive activity.
    4. Corporate profit tax should not be separately included as it has been already included as a part of company profit.

    Items to be included:
    1. Imputed value of rent for self occupied houses or offices is to be included.
    2. Imputed value of services provided by owners of production units (family labour) is to be included.

    3•The Expenditure Method (Outlay method)
    Under this method, the total expenditure incurred by the society in a particular year is added together. To calculate the expenditure of a society, it includes personal consumption expenditure, net domestic investment, government expenditure on consumption as well as capital goods and net exports. Symbolically,

    GNP = C + I + G + (X-M)
    C – Private consumption expenditure
    I – Private Investment Expenditure
    G – Government expenditure
    X-M = Net exports

    Precautions
    1. Second hand goods: The expenditure made on second hand goods should not be included.
    2. Purchase of shares and bonds : Expenditures on purchase of old shares and bonds in the secondary market should not be included.
    3. Transfer payments : Expenditures towards payment incurred by the government like old age pension should not be included.
    4. Expenditure on intermediate goods : Expenditure on seeds and fertilizers by farmers, cotton and yarn by textile industries are not to be included to avoid double counting. That is only expenditure on final products are to be included.

    National Income (NNPFC) = Gross Value Added by all the production Enterprises within the Domestic Territory of the Country – Depreciation – Net Indirect Taxes + Net Factor Income from Abroad
    [Where, Net Indirect Taxes = Indirect tax – Subsidies]
    [Gross Value Added = Value of Output – Intermediate Consumption] Value of Output = Sales + Change in Stock
    Where, Change in Stock = Closing Stock – Opening Stock
    Note: If entire out put is sold within the year, then value of output will be equal to sales itself.
    or
    Value of Output = Price x Quantity Sold
    GDPMP = Private Final Consumption + Government Final Consumption Expenditure + Gross Domestic Capital Formation + Net Exports (Exports – Imports)

  9. National income can be seen as the government book of recording system that keeps in check the health of the economy, projected growth, economic activity and development during a certain period of time.The double entry system is likely used to prepare the national income account.It is expressed in the equation as
    Y=C+I+G+(X-M).So various methods of national income are as follows:
    1.Product income:Also known as the value added method.It is based on the net value added to the product at every stage of production which are usually divided into different industry such as fishing, agriculture,transport,etc.It is calculated by adding the total output of the companies in the economy showing the contribution of each sector to the national income,thus demonstrating the importance of different sectors

    2.Income method:Measured by adding up the pre-tax income generated by the individuals and companies in the economy.It consists of income from wages, rent of building and land,interesting capital,profits,etc.It also shows the income distribution among different earning groups

    3.Expenditure method:In this method,the national income is measured or checkedby adding up the expenditures made by individuals,companies and the government.It combines consumers spending, investment made by companies, net exports and government spending

  10. Avatar Collins Chisom Kingsley Reg no: 2020/244922 says:

    Measurement of National Income

    There are three ways of measuring the National Income of a country. They are from the income side, the output side and the expenditure side. Thus, we can classify these perspectives into the following methods of measurement of National Income.

    Methods of Measuring National Income

    Product Method
    Income Method
    Expenditure Method
    1. Product Method

    Under this method, we add the values of output produced or services rendered by the different sectors of the economy during the year in order to calculate the National Income.

    In this method, we include only the value added by each firm in the production process in the output figure.

    Hence, we use the value-added method. The value-added output of all the sectors of the economy is the GNP at factor cost.

    However, this method is unscientific as it adds the value of only those goods and services that are sold in the market or are available for sale in the market
    2. Income Method

    Under this method, we add all the incomes from employment and ownership of assets before taxation received from all the production activities in an economy.

    Thus, it is also the Factor Income method. We also need to add the undistributed profits of the private sector and the trading surplus of the public sector corporations.

    However, we need to exclude items not arising from productive activities such as sickness benefits, interest on the national debt, etc.

    3. Expenditure Method

    This method measures the total domestic expenditure of the economy. It consists of two elements, viz. Consumption expenditure and Investment expenditure.

    Consumption expenditure includes consumption expenditure of the household sector on goods and services and consumption outlays of the business sector and public authorities.

    Investment expenditure refers to the expenditure on the making of fixed capital such as Plant and Machinery, buildings, etc.

  11. The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method.

    1. 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 process.

    National income
    Image Courtesy : peteranthony.org/wordpress/mall.jpg

    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.

    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.

    The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.

    2. Income Method:

    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.

    3. Expenditure Method:

    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import)

  12. Avatar Agbo Gift obianuju says:

    Name: Agbo Gift obianuju
    Department: combined social sciences (Economics/Philosophy)
    Email: Agbogift2003@gmail.com
    Course:Eco 122

    1. The Product Method:
    In this method, all goods and services produced during the year in various industries are added up. This is also known as value-added to GDP or GDP at the sector of origin’s cost factor. India includes the following items: agriculture and allied services; mining; development, construction, the supply of electricity, gas, and water, transport, communication, and trade; banking and insurance; real estate and property ownership of residential and commercial services and public administration and defence and other services (or government services). It is, in other words, the amount of the added gross value.

    2. The Income Method:
    In a nation that produces GDP during a year, people earn income from their jobs. Thus the sum of all factor incomes is GDP by revenue method: wages and salaries (employee compensation) + rent + interest + benefit.
    3. Expenditure Method:
    This approach focuses on products and services generated during one year within the region.

    GDP is subtracted from the portion of consumption, investment, and government spending expended on imports. Likewise, all manufactured components, such as raw materials used in the manufacture of products for sale, are also exempt.
    Thus GDP by expenditure method at market prices is net export, which can be positive or negative.

  13. Avatar Uliaga miracle ebubechukwu says:

    Uliaga miracle ebubechukwu
    Pure and industrial chemistry
    2020/245161
    uliagam184@gmail.com

    Answers
    There are three method of measuring the national income
    1:the product method:in this method all goods and services produced during the year in various industry are added up.this is also known as value added to GDP or GDP at the sector of origin cost factor

    2: the income method: in the nation that produces GDP during a year, people earn income from thier jobs.

    3: expenditure method:this approach focuses on product and Services generated during one year within the region.

  14. Avatar Nwizu chidera pelumi (2020/247046) says:

    1. 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 process.Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.

    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.
    2. Income Method:

    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.
    3. Expenditure Method:

    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  15. Avatar Neto Daniel reg no.20694785HF says:

    There are three main methods of measuring the method of national income, namely;
    Product Method
    Income method Expenditure method
    Product Method:
    Product Method also known as output or Value added 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 process.It is the most direct method of arriving at an estimate of a country’s national output or income.When we use the output approach, one major problem arises. This is known as the problem of double counting. It arises due to the fact that the industry’s output is often the input of another industry. This is why when we add up the values of all sales, the same output is counted again and again as it is sold by one firm to another. The way to solve this problem is by using the concept of ‘value added’, which is the difference between output value and input at each stage of production.
    Income method:
    Income method also known as distribution method or factor earning method, income method of calculating national income takes into account the income generated from the basic factors of production. These include the land, labor, capital, and Entrepreneur. And in addition to income accumulated from these factors of production, another important component of income is mixed income, mixed income refers to the income of the self-employed individuals, farming units, and sole proprietorships. athis is how income method is calculated.
    Y = w + r + i + π + (R-P)
    w = wages, r = rent, i = interest, π = profits,
    R = Exports and P = Imports
    Expenditure method:
    Expenditure method also known as Outlay method or income disposal method, Under this method, the total expenditure accumulated by the society in a particular year is added together. To calculate the expenditure of a society, it includes personal consumption expenditure, net domestic investment, government expenditure on consumption as well as capital goods and net exports. Symbolically,

    GNP = C + I + G + (X-M)

    C – Private consumption expenditure

    I – Private Investment Expenditure

    G – Government expenditure

    X-M = Net exports

  16. Avatar Obi Francisca Nwamaka says:

    National Income (NI): This is also known as National Income at factor cost which means total income earned by resources for their contribution of land, labor, capital, and organizational ability. Hence, the sum of the income received by factors of production in the form of rent, wages, interest, and profit is called National Income.
    Symbolically or as per the formula
    NI=NNP +Subsidies-Interest Taxes
    or, GNP-Depreciation +Subsidies-Indirect Taxes
    or, NI=C+G+I+(X-M) +NFIA-Depreciation-Indirect Taxes +Subsidies
    The development of a country can generally be determined by
    it’s per capita income
    its average literacy level
    health status of its people
    One of the most important attributes for comparing different countries is their income. Countries with less income are considered to be less developed than nations with higher incomes.
    Human beings can have more of all the things that they need if they have more income. This is the underlying reason for comparing the incomes of countries to measure development.
    The country’s development depends on the following factors
    In general, a country’s growth is decided by its per capita income, its average level of literacy as well as the health status of the people in the nation.
    A country’s growth is a general concept that improves people’s per capita income and living standards.
    It also lowers the poverty, the rate of crimes as well as the illiteracy of individuals.
    Development not just depends on the economic factors of a country but is also dependent on resources that are available for the people of a country to use.
    Two aspects of development are
    Economic growth or increase in people’s income.
    Social progress includes literacy, health, and the provision of public services.
    Components of national development
    The components of national development are as follows
    Development of rural areas
    Increasing agricultural outputs
    Enlargement of economic knowledge
    Handling of growth in urban areas
    Eradication of poverty
    National development is the capacity of the country to raise the standard of living of its residents. It can be achieved by providing individuals with basic livelihood requirements and supplying them with employment, etc.
    Development is a process that creates growth, brings progress and positive change.
    Development is a healthy sign.
    Measurement of National Income
    There are three methods to calculate National Income:
    Income Method
    Product/ Value Added Method
    Expenditure Method
    Income Method
    In this National, Income is measured as the flow of income.
    We can calculate NI as:
    Net National Income = Compensation of Employees+ Operating surplus mixed (w +R +P +I) + Net income + Net factor income from abroad. Where,
    W = Wages and salaries
    R = Rental Income
    P = Profit
    I = Mixed-Income
    Product/ Value Added Method
    In this National, Income is measured as the flow of goods and services.
    We can calculate NI as:
    NATIONAL INCOME = G.N.P – COST OF CAPITAL – DEPRECIATION – INDIRECT TAXES
    Expenditure Method
    In this National, Income is measured as the flow of expenditure.
    We can calculate NI through the Expenditure method as:
    National Income=National Product=National Expenditure.
    So, above were the concepts of National Income explained in detail. The students of various exams like UPSC, SSC, and Bank PO must go through these concepts to excel in their exams.
    What is the income method in National Income?
    The Income Method can measure national income from the side of payments made to the primary factors of production in the form of rent, wages, interest, and profit for their productive services in an accounting year.
    The formula of National Income is NI = C (household consumption) + G (government expenditure) + I (investment expense) + NX (net exports).

  17. Avatar Diarua Martin Chidera says:

    1) 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 process.
    2) Income Method: 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.
    3) Expenditure Method: In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  18. Avatar Mba Gift Agu says:

    Name: Mba Gift Agu
    Reg no: 2020/246360
    Department: economics
    Course code: eco 102
    Title of assignment: ways of measuring national income

    National income means the value of goods and services produced by a country during a financial year. Thus, it is the net result of all economic activities of any country during a period of one year and is valued in terms of money.
    The computation of the national income of a country is very Vital as it helps to determine the health of the economy. It includes payments made to all resources either in the form of wages, interest, rent, and profits.
    There are ways of measuring the national income which are;

    There are three ways of measuring the National Income of a country. They are from the income side, the output side and the expenditure side. Thus, we can classify these perspectives into the following methods of measurement of National Income.
    Which are:

    Methods of Measuring National Income
    1: Product Method
    2. Income Method
    3. Expenditure Method
    1. Product Method

    Under this method, we add the values of output produced or services rendered by the different sectors of the economy during the year in order to calculate the National Income.

    In this method, we include only the value added by each firm in the production process in the output figure.
    Hence, we use the value-added method. The value-added output of all the sectors of the economy is the GNP at factor cost.

    However, this method is unscientific as it adds the value of only those goods and services that are sold in the market or are available for sale in the market.
    2. Income Method

    Under this method, we add all the incomes from employment and ownership of assets before taxation received from all the production activities in an economy.

    Thus, it is also the Factor Income method. We also need to add the undistributed profits of the private sector and the trading surplus of the public sector corporations.

    However, we need to exclude items not arising from productive activities such as sickness benefits, interest on the national debt, etc.

    3. Expenditure Method

    This method measures the total domestic expenditure of the economy. It consists of two elements, viz. Consumption expenditure and Investment expenditure.

    Consumption expenditure includes consumption expenditure of the household sector on goods and services and consumption outlays of the business sector and public authorities.

    Investment expenditure refers to the expenditure on the making of fixed capital such as Plant and Machinery, buildings, etc.
    There are difficulties in masuring the national income which are:

    1: Conceptual difficulties
    2. Statistical difficulties
    A. Conceptual difficulties
    It is difficult to calculate the value of some of the items such as services rendered for free and goods that are to be sold but are used for self-consumption.
    Sometimes, it becomes difficult to make a clear distinction between primary, intermediate and final goods.
    What price to choose to determine the monetary value of a National Product is always a difficult question?
    Whether to include the income of the foreign companies in the National Income or not because they emit a major part of their income outside India?
    B. Statistical difficulties
    In case of changes in the price level, we need to use the Index numbers which have their own inherent limitations.
    Statistical figures are not always accurate as they are based on the sample surveys. Also, all the data are not often available.
    All the countries have different methods of estimating National Income. Thus, it is not easily comparable.
    The usefulness of estimating National Income is as follows:

    It depicts the change in the production to output and also the effects of the Government policies on the economy.
    The National Income studies the relation between the input of one industry and the output of the other.
    It shows the income distribution among different economic units.
    It also shows the change in the tastes and preferences of the consumers and thus, helps the producers to decide what to produce and for whom to produce.
    The quantum of the National Income of a country indicates its ability to pay its share for international purposes, such as membership of IMF, World Bank or SAARC.

  19. Avatar Mamah Kenneth ifeanyi, Reg. no 2020/241379 says:

    National income means the value of goods and services produced by a country during a financial year. Thus, it is the net result of all economic activities of any country during a period of one year and is valued in terms of money.
    The national income of a country can be measured by three alternative methods: (i) Product Metho d (ii) Income Method, and (iii) Expenditure Method
    1.Product or value added method is a way of computing the national income of a country. This system is also known as output or inventory method. This method calculates national income by adding value to a product at every stage of its production.
    2.National income accounting refers to the government bookkeeping system that measures the health of an economy, projected growth, economic activity, and development during a certain period of time. It helps in assessing the performance of an economy and the flow of money in an economy. The double entry system principle of accounting is used to prepare the national income accounts.

  20. Avatar Ezeme malachy chinemerem ..2020/2424549 says:

    Gross national income,gross national output and gross national expenditure are methods used to measure the income of a nation.they must be equal because they consist of the total expenditure on goods and services
    Thus GNI–=GNP=–GNE
    Ezeme malachy chinemerem
    2020/242549

  21. Avatar Mpama Onyinyechi adaugo says:

    Name: Mpama Onyinyechi Adaugo
    Reg no:2020/245072
    Department: Economics
    Answers;
    The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method.

    1. 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 process. Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.
    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.
    The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.

    2. Income Method: 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.

    3. Expenditure Method: ttIn this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  22. Avatar Ezeakonobi Chidimma Rosemary. Reg no - 2020/241137. says:

    There are three ways of measuring national income.
    1) Product (output) method
    2) Product method.
    3) Expenditure method.

    1) Product ( output) method : The output value of all firm in the economy are added to get the value of the nation’s output. Output method measure national output called GDP in terms of the value added by each sector of the economy. Value added method is used to avoid double counting or multiple counting.
    2) Income method – The income generated by all the factors of production ( capital, land , labour and entrepreneurship) are calculated as factor cost. When income method is used, all transfer incomes like unemployment benefit, widow pension etc are excluded because they are not part of the payment made for service rendered.
    3) Expenditure method – National income is measured by adding up the flow of expenditure needed to purshase the nation’s output.
    Nb – Only the final expenditures are recorded.
    While measuring the Total Final Expenditure( TFE) is divided into categories namely : consumption, investment, givernment expenditure, exports and import. These four components are calculated to get the Gross Domestic Product(GDP).
    Y = C + I + G + ( X – M). Where Y – GDP, C – consumption, I – investment, G – government expenditure, X – export, M – import.

  23. Avatar Ngene Christian .c. says:

    METHOD USED IN MEASURING NATIONAL INCOME:

    1. PRODUCT METHOD::
    According to this method, the whole cost of final goods and services produced in a country during a year is calculated at market prices.
    To discover the GNP, the data of all productive activities, consisting of agricultural products, minerals obtained from mines, commodities produced by industries, the contributions to production made by transport, communications, insurance companies, lawyers, doctors, teachers, etc. are collected and assessed at market prices.
    Only the final goods and services are included and the intermediary goods and services are left out in order to avoid double country.

    The following problems arise in the computation of national income by the product method;;
    1) Services of housewives are not counted.

    2) Income earned illegally like gambling, smuggling, illicit extracton of wine e.t.c are not included in the national income.

    3) price changes may so be a hindrance to the sucessful computation of the national income.

    2) INCOME METHOD

    According to this method, the net income payments received by all residents of a country in a specific year are added up, i.e., net incomes that accrue to all factors of production by way of net rents, net wages, net interest and net profits are all added together but incomes received in the form of transfer payments are not included in it.

    The data pertaining to income are obtained from different sources, for instance, from income tax department in respect of high income groups and in case of workers from their wages bills.

    3) EXPENDITURE METHOD
    According to this method, the entire expenditure incurred by the society in a particular year is added collectively and includes personal consumption expenditure, net domestic investment, government expenditure on goods and services, and net foreign investment. This concept is based on the assumption that national income equals national expenditure.

    4) VALUE ADDED METHOD
    Another approach of measuring national income is the value added by industries. The difference among the value of material outputs and inputs at each level of manufacturing is the value added. If all such variations are added up for all industries in the economy, we arrive at the gross domestic product.

  24. Avatar Amoke Daberechukwu Anne says:

    1. The Product Method:
    In this method, all goods and services produced during the year in various industries are added up. This is also known as value-added to GDP or GDP at the sector of origin’s cost factor. India includes the following items: agriculture and allied services; mining; development, construction, the supply of electricity, gas, and water, transport, communication, and trade; banking and insurance; real estate and property ownership of residential and commercial services and public administration and defence and other services (or government services). It is, in other words, the amount of the added gross value.

    2. The Income Method:
    In a nation that produces GDP during a year, people earn income from their jobs. Thus the sum of all factor incomes is GDP by revenue method: wages and salaries (employee compensation) + rent + interest + benefit.
    3. Expenditure Method:
    This approach focuses on products and services generated during one year within the region.

    GDP is subtracted from the portion of consumption, investment, and government spending expended on imports. Likewise, all manufactured components, such as raw materials used in the manufacture of products for sale, are also exempt.
    Thus GDP by expenditure method at market prices is net export, which can be positive or negative.

  25. Avatar Name: Ezema Favour Obiajulu Reg No: 2019/250375 says:

    METHODS OF MEASURING NATIONAL INCOME

    The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method.
    These three methods of calculating GDP yield the same result because National Product = National Income = National Expenditure.

    1. The Product Method:
    In this method, the value of all goods and services produced in different industries during the year is added up. This is also known as the value added method to GDP or GDP at factor cost by industry of origin. The 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 process. Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.
    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP. The money value is calculated at market prices so sum-total is the GDP at market prices. In other words, it is the sum of gross value added.

    2. The Income Method:
    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.
    The people of a country who produce GDP during a year receive incomes from their work. Thus GDP by income method is the sum of all factor incomes: Wages and Salaries (compensation of employees) + Rent + Interest + Profit.

    3. Expenditure Method:
    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import). This method focuses on goods and services produced within the country during one year.

    GDP by expenditure method includes:
    (1) Consumer expenditure on services and durable and non-durable goods (C),
    (2) Investment in fixed capital such as residential and non-residential building, machinery, and inventories (I),
    (3) Government expenditure on final goods and services (G),
    (4) Export of goods and services produced by the people of country (X),
    (5) Less imports (M). That part of consumption, investment and government expenditure which is spent on imports is subtracted from GDP. Similarly, any imported component, such as raw materials, which is used in the manufacture of export goods, is also excluded.

    Thus GDP by expenditure method at market prices = C+ I + G + (X – M), where (X-M) is net export which can be positive or negative.

  26. Avatar Amoke Daberechukwu Anne says:

    1. The Product Method:
    In this method, all goods and services produced during the year in various industries are added up. This is also known as value-added to GDP or GDP at the sector of origin’s cost factor. India includes the following items: agriculture and allied services; mining; development, construction, the supply of electricity, gas, and water, transport, communication, and trade; banking and insurance; real estate and property ownership of residential and commercial services and public administration and defence and other services (or government services). It is, in other words, the amount of the added gross value.

    2. The Income Method:
    In a nation that produces GDP during a year, people earn income from their jobs. Thus the sum of all factor incomes is GDP by revenue method: wages and salaries (employee compensation) + rent + interest + benefit.
    3. Expenditure Method:
    This approach focuses on products and services generated during one year within the region.

    GDP is subtracted from the portion of consumption, investment, and government spending expended on imports. Likewise, all manufactured components, such as raw materials used in the manufacture of products for sale, are also exempt.
    Thus GDP by expenditure method at market prices is net export, which can be positive or negative.

  27. Avatar REMIGIUS CHIDEBERE RICHARD says:

    NAME: REMIGIUS CHIDEBERE RICHARD
    REG NO.: 2020/242621
    DEPT.: MAJOR ECONOMICS
    EMAIL: Bcrichardremigius@gmail.com
    BLOG ADDRESS:
    https://www.successtonicsblog.com/2022/01/13093

    3 Important Methods for Measuring National Income

    The national income of a country can be measured by three alternative methods:
    (i) Product Method
    (ii) Income Method
    (iii) Expenditure Method.

    1. 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 process.

    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.

    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.
    The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.

    2. Income Method:
    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 cost.

    3. Expenditure Method:
    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  28. Avatar Abonyi John chibueze says:

    LIST AND EXPLAIN THE THREE METHODS OF MEASURING NATIONAL INCOME.

    1. SIZE DISTRIBUTIONS.
    2. LORENZ CURVE FOR INCOME AND WEALTH
    3.GINI COEFFICIENTS AND INCOME INEQUALITY.

    1.
    Another way to describe income distribution in an economy that is commonly used by economists is the distribution of income. It deals with families or households and the total income they received .

    2.
    The most common way of describing the distribution of income and wealth is the use of a Lorenz curve . A Lorenz curve is a geometric representation of the size distribution of income among families in a given country at a given time. It shows the cumulative percentage of income or wealth of any given cumulative percentage of families. The Lorenz curve derives its name from its founder Konrad Lorenz.
    3.
    A final and very convenient summary measure of the relative degree of income inequality in a country can be obtained by calculating the ratio of the area between the diagonal line (the line of equality or 45°line) and Lorenz curve divided by the total area of the half square in which the curve lies.

  29. Avatar Desmond Chibuike Kenneth. Department : pure and industrial chemistry. Registration number : 2020/243916 says:

    There are three distinct ways of measuring national income, namely :
    1. Product method : this is a method where national income is measured as a flow of goods and services produced in an economy during a year.
    2. Income method : is a method where national income is measured in relation to factor incomes. These factors includes labour,capital,land and entrepreneurship.
    3. Expenditure method : this is a method which calculates or measures national income as a flow of expenditure. That is it monitors the way money is being spent in a country.

  30. Avatar Anelechukwu precious kelechi says:

    Name:Anelechukwu Precious
    Department: economics
    Reg number: 2020/242577

    * List and explain the various methods of measuring National Income?
    There are four methods of measuring the national income which are:
    1. Product method
    2. Income method
    3. Expenditure method
    4. Value added method

    Product method: This is the total value of final goods and services produced in a year is calculated at market price . To find out the GNP the data of all productive activities such as agricultural products,wood received from forests ,minerals from miners, commodities produced from industries, the contribution to production made by transport, communication, insurance companies ,lawyers, doctors, teachers etc are collected and assessed at market price .only the final goods and services we included and the intermediary goods and services.

    2. Income method: The net income payments received by all citizen of a country in a particular year are added up i.e net income that accrue to all factors of production by way of net rents, net wages, net interest and net profits are all added together but incomes received in the form of transfer payment are not included in it. The data pretaining to income are obtained from different sources.

    3. Expenditure method: is the total expenditure incurred by the society in a particular year is added together and together and includes personal consumption expenditure,net domestic investment, government expenditure on goods and services and net foreign investment. This concept is based on the assumption that national income equals national expenditure.

    4. Value added method: Another method of measuring national income is the value added by industries. The difference between the value of materials outputs and inputs at each stage of production is the value added. If all such differences are added up for all Industries in the economy,we arrive at the gross domestic product.

  31. Avatar john okechukwu james says:

    NAME : JOHN OKECHUKWU JAMES
    DEPARTMENT: SOCIAL SCIENCE EDUCATION (EDUCATION ECONOMICS)
    REG NO : 2020/243850
    TOPIC: METHOD OF MEASURING NATIONAL INCOME
    EMAIL: sponkybrown3@gmail.com
    COURSE : ECO 102 ( PRINCIPLES OF ECONOMICS II)

    Method of measuring national income
    *National income can be defined as the monetary value over a period of time of the output flow of goods and services produced in an economy. National income can also be defined as the measurement that measures the income generated by a country through the production activities that are carried out within a country during a specific period of time. they are three method of measuring national income ; 1) the Product method . 2) the income method . 3) the expenditure method .
    * THE PRODUCTION METHOD : The value added method/ product method is also known as the output method or inventory method. In this method, the sum total of the gross value of the final goods and services in different sectors of the economy like industry, service, agriculture, etc. is acquired for the current year by determining the total production that was made during the specific time period. The value obtained is the gross domestic product.

    *THE INCOME METHOD : According to this method, the net income payments received by all citizens of a country in a particular year are added up, i.e., net incomes that accrue to all factors of production by way of net rents, net wages, net interest and net profits are all added together but incomes received in the form of transfer payments are not included in it. The data pertaining to income are obtained from different sources, for instance, from income tax department in respect of high income groups and in case of workers from their wage bills

    * THE EXPENDITURE METHOD : According to this method, the total expenditure incurred by the society in a particular year is added together and includes personal consumption expenditure, net domestic investment, government expenditure on goods and services, and net foreign investment. This concept is based on the assumption that national income equals national expenditure.

  32. Avatar Azubuike Chiamaka Maryann says:

    Azubuike Chiamaka Maryann
    2013/187242
    Economics department

    The following points highlight the three methods for measuring national income. The methods are: 1. The Product (Output) Method 2. The Income Method 3. The Expenditure Method.

    1. The Product (Output) Method:
    The most direct method of arriving at an estimate of a country’s national output or income is to add the output figures of all firms in the economy to get the total value of the nation’s output. The outputs can be grouped into certain product categories corresponding to industries or to sectors (such as the primary sector, secondary sector and the tertiary sector).
    the income approach measures GDP “in terms of the factor-in- come claims generated in the course of producing the total output.”
    Transfer Income:
    When we use the income method we have to exclude all transfer incomes such as unemployment benefit, widow pension, child benefits or even interest on government bonds. These are transfer incomes since they are not payments for services rendered — there is no contribution to current real output by the recipients.If we use the value added method of estimating national output, we have to include exports but exclude imported materials and services. Imports are automatically excluded since we only record the values added in this country. This will give us the GDP. In general, the GDP is measured at market prices, giving the market value of all output. To this, we must add (or from this we must subtract) the net factor property.

    Income from Abroad:

    What is the gross national product? GNP is the name we give to the total rupee value of the final goods and services produced within a nation during a given year. It is the figure one arrives at when one applies the measuring rod of money to the diverse goods and services—from computer games to machine tools—that a country produces with its land, labour, and capital resources and it equals the sum of the money values of all consumption and investment goods, government purchases, and net exports to other coun­tries.

    GNP is used for various purposes, but the most important one is to measure the overall performance of an economy.

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    The gross domestic product (or GDP) is the most comprehensive measure of a nation’s total output of goods and services.
    2. The Income Approach
    the income approach measures GDP “in terms of the factor-in- come claims generated in the course of producing the total output.”
    Transfer Income:
    When we use the income method we have to exclude all transfer incomes such as unemployment benefit, widow pension, child benefits or even interest on government bonds. These are transfer incomes since they are not payments for services rendered — there is no contribution to current real output by the recipients.
    Thus, while using the income method we must only take into account those which have been earned for services rendered and in respect of which there is some corresponding value of output. Interest paid on government bonds is to be excluded for a simple reason.
    The government imposes taxes on some people to pay interest to others. But, the total output (or income) of society does not increase in the process. We may also refer to private transfer in this context. If you receive a gift from your father who is also a resident of India, India’s national income will remain unchanged.
    Disposable Income:
    Factor incomes are normally recorded gross (i.e., before taxes are paid), because this is the measure of the factors’ contribution to output. If we subtract all direct taxes as also provident funds contributions and interest paid by individuals on loans (say to HDFC or to Citi Bank credit cards) from national income we arrive at disposable income. It is so called because people can dispose it off as they wish.
    Personal Incomes:
    National income is not the sum of all personal incomes. The reason is simple. All the income generated in production does not find its way into personal incomes. A certain portion of company profit is added to reserves (and not distributed as dividends among shareholders). Likewise, the profits of public sector (state) enterprises are appropriated by the government and not by persons. But, these undistributed surpluses must be added on to the total of factor incomes received by persons to arrive at national income
    3. The Expenditure Method:
    From the expenditure side national income is calculated by adding up the flows of expenditure needed to purchase the nation’s output. However, while estimating the value of national product by the expenditure method we must only record final expenditures.
    We have to exclude all the expen­diture on intermediate goods and services. While measuring national in­come total final expenditure (TFE) is divided into four broad categories: consumption, investment, government expenditure (spending), exports and imports. These four components may now be further developed.Consumption:
    Consumption expenditure refers to all purchases by households of cur­rently produced goods and services, except new houses which are counted as investment. Secondly, consumption of second hand goods like used cars is to be excluded to avoid double counting. Thirdly, we have to measure purchases of goods and services made in a year. We need not measure their actual consumption that occurs during the year (or any other period under consideration).
    Investment:
    Investment is expenditure on currently produced capital goods like plant and equipment and housing. Stocks are also included. Investment may be gross or net. Gross investment less depreciation is net investment, or net addition to (purchase of) society’s stock of capital.
    Government Expenditure:
    Money that government spends falls into two categories, one is called transfer payments. These are money paid out for which nothing is given back to the government. One good example is pension paid to retired people. There is a sort of transfer of money from tax-payers to the people receiving pensions.
    Exports and Imports:
    Since exports represent foreigners’ expenditure on domestic output these are included in GDP. Likewise imports are domestic consumers’ expenditure on foreign goods. Hence, they are not a part of GDP. In the language of Lipsey, “expenditure approach measures the GDP in terms of the categories of expenditure required to purchase the total output of society”.

  33. Avatar Chinedu Miracle Ifechukwu 2020/243701 says:

    Method of Measuring National income
    There are four methods of Measuring National income
    1. Product Method: this method involves the calculation of the total value of final goods and services produced in a country during a year at market prices. To find out the GNP, the data of all productive activities such as agricultural products, wood reserve from forest, mineral reserved from mines, and so on are collected and assessed at market prices. Only final goods and services are included while intermediary goods and services are left out.
    2. Income Method: this method involves the summation of the net income payment received by all citizens of a country in a particular year. This involves net income that accrue to all factors of production by way of net rents, net wages, net interest and net profit are all sumed up but the incomes received in the form of transfer payment are not included.
    3. Expenditure Method: The total expenditure incurred by the society in a particular year is added together and includes personal consumption expenditure, net domestic investment and so on. It is based on the assumption that national income equals national expenditure.
    4. Value Added Method: this is another method of Measuring national income by industries. The difference between the value of material output and input at each stage of population is the value added.

  34. Avatar Mba Chinasa God'stime says:

    The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method.

    1. 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 process.
    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.
    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.
    The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.

    2. Income Method:
    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.

    3. Expenditure Method:
    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  35. Avatar Eze Emmanuel Ifeanyi , 2020/243120, philosophy says:

    1. Production or value added method

    2. Income method or factor earning method

    3. Expenditure method

    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.

    1. Product Method
    Product method measures the output of the country. It is also called inventory method. Under this method, the gross value of output from different sectors like agriculture, industry, trade and commerce, etc., is obtained for the entire economy during a year. The value obtained is actually the GNP at market prices. Care must be taken to avoid double counting.

    The value of the final product is derived by the summation of all the values added in the productive process. To avoid double counting, either the value of the final output should be taken into the estimate of GNP or the sum of values added should be taken.

    2. Income Method (Factor Earning Method)
    This method approaches national income from the distribution side. Under this method, national income is calculated by adding up all the incomes generated in the course of producing national product.

    3. The Expenditure Method (Outlay method)
    Under this method, the total expenditure incurred by the society in a particular year is added together. To calculate the expenditure of a society, it includes personal consumption expenditure, net domestic investment, government expenditure on consumption as well as capital goods and net exports. Symbolically,

  36. Avatar Idika chinemerem Augustina says:

    Three important methods to measure national income
    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 .
    Income Method: under this method national income is measured as a flow of factor incomes. There are generally four factors of production, labour, capital,land and enterpreneurship.
    Expenditure Method: in this method national income is measured as a flow of expenditure.GDP is sum total of private consumption

  37. Avatar Iruefo Chibike Alexander says:

    IRUEFO CHIBIKE ALEXANDER
    2020/249749
    iruefoa@gmail.com
    BUSINESS EDUCATION

    The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method.

    1. 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 process.
    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.

    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.

    2. Income Method:

    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.

    3. Expenditure Method:

    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  38. Avatar Okenwa Eunice Chiyere says:

    VARIOUS METHODS IN MEASURING NATIONAL INCOME
    There are three method in which national income of a country can be measured. They are;
    1 Product method
    2.Income method
    3. Expenditure method

    *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 refers to those goods which are directly consumed and not used in further production process. It is also the act of measuring the output of all producers and to deduct it from his total the intermediate purchases.An unduplicated figure of this kind can be obtained separately for each producer. This represents the value of the intermediate products with which he starts and hence his contribution to the total value of production.

    *INCOME METHOD
    Under this method, National income is measured as a flow of factor incomes.There are basically four factors of production labour, capital,land and entrepreneurship. Labour gets wages and salaries, Capital gets interest, land gets rents and entrepreneurship gets profit as their remuneration. The sum total of all these factors incomes is called NDP factor costs.

    * EXPENDITURE METHOD
    National income can also be measured as sum of expenditure in final goods and services less depreciation of capital assets.This involves drawing a distinction between final and intermediate purchases and transaction . GDP Is the sum-total Private consumption expenditure. Government consumption expenditure, gross capital formation.(Government and private) and net exports (Export- Import)
    In other words, national expenditure in a closed economy is the sum of nation’s consumption and it’s investment.
    However,in an open economy having foreign trade, adjustment will have to be made for import and exports. National expenditure us recorded as market prices.To derive estimates at factor costs, an adjustment has to be made for indirect taxes net of subsidies, if any.

  39. Avatar Itohowo Emmanson Akai says:

    Akai, Itohowo Emmanson. Faculty of Education
    Dept. Social science education (Eco&Edu)
    Reg. No. 2020/247029. Course title. Eco102 Assignment. Methods of measuring Nationl income. First of all, what is National income? In common parlance, it means the total value of goods and services produced annually in a country.
    The approaches used to measure are:
    1. THE INCOME APPROACH: In this approach, the total monetary values of incomes received by individuals, business organizations, government bodies etc, are calculated. These incomes entail all interests, salaries, rents, profits, etc, received and made in a given period of time usually a year.
    2. THE OUTPUT APPROACH OR VALUE ADDED APPROACH: This is an approach of calculating the monetary value of goods and services produced in a given country in a period under review usually a year. In calculating the national income via the output method, care must be taken to avoid double counting of the outputs of all the sectors of the economy.
    3. THE EXPENDITURE APPROACH: Here, it talks about the calculation of the total monetary value of expenditures on goods and services by the government, individuals, organizations etc., Within a country in a given period. In this calculation, expenditure on intermediate goods and services, such as capital goods and services bought and used for further production must be excluded.

  40. Avatar UBADIGHA STANLEY CHIDERA 2020/245100 says:

    WAYS OF MEASURING NATIONAL INCOME INCLUDE:
    1. INCOME METHOD
    Here all income from employment and ownership of asset are added before taxation
    2. PRODUCT METHOD
    Here values of output produced or service rendered by the different sectors of economy during the year is added.
    3. EXPENDITURE METHOD
    This method measures the total domestic expenditure of the economy. It consists 9f two element: consumption expenditure and investment expenditure.

  41. Avatar Okenwa Eunice Chiyere says:

    NAME: OKENWA EUNICE CHIYERE
    DEPT: BUSINESS EDUCATION
    REG NO: 2020/242140

    VARIOUS METHOD IN MEASURING NATIONAL INCOME.
    We have three ways in which national income of a country can be measured. They are;
    1Product method.
    2.Income method.
    3.Expenditure method.

    *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 refers to those goods which are directly consumed and not used in further production process. It is also the method of measuring the output of all producers and to deduct from the total intermediate purchases. An duplicated figure of this kind can be obtained separately for each producer. This represent the value of intermediate product with which he starts and hence is contribution to the total value of production.

    *INCOME METHOD
    Under this method, National income is measured as a flow of factor incomes. There are basically 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. The sum total of all these factor incomes Is called NDP at the factor costs.

    * EXPENDITURE METHOD
    National income can also be measured as sum of expenditure on final goods and services less depreciation of capital assets. This involves drawing a distinction between final and intermediate purchases and transaction. GDP is sum- total of private consumption expenditure. (Government and private) and net exports (Export- Import).
    In other words, national expenditure in a closed economy is the sum of national consumptions and its investment. However, in an open economy having foreign trade, adjustment will have to be made for imports and exports. National expenditure is recorded at market prices. To derive estimates at factor costs, an adjustment has to be made for indirect taxes net of subsides, if any.

  42. Avatar Iyambo Paschal Chekwubechukwu..Reg no 2020/243132.... PHILOSOPHY . says:

    The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method.

    1. 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 process.
    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.

    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.
    The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.

    2. Income Method:

    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.

    3. Expenditure Method:

    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  43. Avatar IROHA JANE KALU 2020/246973 says:

    The national income of a country can be measured by 3 alternative method, They are :
    1. product method
    2. Income method
    3. Expenditure method
    1. PRODUCT METHOD:
    In production 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 refers to those goods which are directly consumed and not used in further production process.
    Further more, goods which are further used in production processes are called INTERMEDIATE GOODS. In the value of final goods, value of intermediate goods is already included therefore, we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods. To avoid the problem of double counting, we can use the value of additional method in which not the whole value of a commodity but value-addition. (i.e value of final goods, value of intermediate goods) at each stage of production is calculated and these are summed up to arrive at GDP (GROSS DOMESTIC PRODUCTION)
    2. INCOME METHOD:
    In income method, national income is measured as a flow of factor income. There are generally four factors of production; labour, land, capital and entrepreneurship. Labour gets wages and salaries, capital gets interests and rent, entrepreneurship gets profit as their remuneration. Besides there are some self employed persons who employs thier own labour and. Capital su check as , doctors, advocates, etc. Their income is called mixed income. The sum-total of all these factors of income is called NDP at factor cost.
    3. EXPENDITURE METHOD
    In this method, national income is measured as a flow of expenditure. GDP is a sum-total of private consumption of expenditure. Government consumption expenditure, gross capital information. (Government and private) and not export (Exports-Imports)

  44. Avatar Ugwoke Emmanuel Chidera says:

    VARIOUS METHODS OF MEASURING NATIONAL INCOME:
    a. Product Method
    b.income method
    c. expenditure method
    PRODUCT 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 productions.

    INCOME METHOD: 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.

    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.

    EXPENDITURE METHOD:national income is measured as a flow of expenditure. GDP is sum-total of internal consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports .

    Name:UGWOKE EMMANUEL CHIDERA
    Reg no:2020/243942
    email:emmanuelchidera17@yahoo.com

  45. There are three measure methods of measuring national income which are
    1.product method
    2. Expenditure method
    3.income method.
    1. 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 process.Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.
    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.
    The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.

    2. Expenditure Method: In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import)

    3.Income Method: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.

  46. Avatar Onyelonu Chidire Victory says:

    Name: Onyelonu Chidire Victory
    Reg no: 2020/246205
    Department: Combined social sciences (Eco/Psy)

    Methods in measuring national income
    The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method.
    1. 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 process.Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.
    2. Income Method: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.
    3. Expenditure Method:In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  47. *National income*
    This is refers to the monetary value over a period of time of the output flow of goods and services produced in an economy.
    *The four ways of measuring national income are:*

    1 . Product method
    2. Income method
    3. Expenditure method
    4. Value added method

    1. PRODUCT METHOD:
    Here, 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 process.
    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.
    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.

    2. INCOME METHOD: Under this method,
    the net income payments received by all citizens of a country in a particular year are added up.
    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.

    3. EXPENDITURE METHOD: In this method,
    total expenditure incurred by the society in a particular year is added together and includes personal consumption, GDP. And GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import)

    4. VALUE ADDED METHOD: Another method of measuring national income is the value added by industries. The difference between the value of material outputs and inputs at each stage of production is the value added. If all such differences are added up for all industries in the economy, we arrive at the gross domestic product.

  48. Avatar Chinemerem Daniel nmesoma says:

    Chinemerem Daniel nmesoma
    2020/248460
    Economics department
    chinemeremdaniel10@gmail.com
    The following points highlight the three methods for measuring national income. The methods are:
    1. The Product (Output) Method
    2. The Income Method
    3. The Expenditure Method.

    1. The Product (Output) Method:
    The most direct method of arriving at an estimate of a country’s national output or income is to add the output figures of all firms in the economy to get the total value of the nation’s output. The outputs can be grouped into certain product categories corresponding to industries or to sectors (such as the primary sector, secondary sector and the tertiary sector).
    2. The Income Method:
    The second approach is to measure incomes generated by production. The main items of income are shown in Table 1.

    Income from employment (item no. 1 in the Table) is wages and salaries. Income of self-employed persons (item number 2) includes both wages and return on capital owned by self-employed persons (who are treated as firms in microeconomics). Item number 3 is to be interpreted in a broad sense. It includes not only the rent of land but also the rent of buildings, plus royalties earned from patents and copyrights. Thus, it is a partly of return to land and partly a return to capital. Item number 4 is the major part of return on capital to the private sector.

    Likewise, item number 5 is the major part of the return to capital for the public sector. Item number 6 is depreciation which is the reduction in the value of capital goods due to their contribution to the production process. Depreciation or capital consumption allowance represents that part of the value of output which is not earned by any factor but is the value of capital used up in the process of production. This depreciation is to be treated as part of the gross return on capital.
    3. The Expenditure Method:
    From the expenditure side national income is calculated by adding up the flows of expenditure needed to purchase the nation’s output. However, while estimating the value of national product by the expenditure method we must only record final expenditures.

    We have to exclude all the expen­diture on intermediate goods and services. While measuring national in­come total final expenditure (TFE) is divided into four broad categories: consumption, investment, government expenditure (spending), exports and imports. These four components may now be further developed.

  49. Avatar Nwizugbe Vitalis Toochukwu.2020/249396 says:

    Name: Nwizugbe Vitalis Toochukwu
    Reg no: 2020/249396
    Course: Eco 102

    Eco 102
    METHODS OF MEASURING NATIONAL INCOME
    Output/Product Approach:
    This measures national income in terms of the monetary value of all goods and services produced by the various economic units in a year.
    By economic Units we means individuals: firms and governments. Here, only all the final goods and services are included while intermediary goods and services are ignored.

    Income Approach:.
    This measures all the income received by economic units within a year for their participation in production. That is addition of all incomes received by all factors of production that partake in production Transfer payments are ignored. It is given as:
    Y – f(w.i.m. r)
    Where Y – National income
    W – Wages
    I. – Interest Profil
    R- Rent

    Expenditure Approach:
    It measures the total expenditure of goods and services by economic units in a country within a year it is given as thus:
    Y – C C+1+G+ (x-m)-1
    Where Y – National income
    C – Private consumption expenditure
    G = Government expenditure on good and services
    X= Export
    M – import
    T – Taxes
    D-. Depreciation or capital consumption allowance
    Note: (x-m) -Net export

  50. Avatar Abonyi Ifebuche Faith says:

    Name : Abonyi Ifebuche Faith
    Reg no : 2020/242675
    E-mail : ifebuchefaith51@gmail.com
    Dept : Education Economics

    National income can be defined as the monetary value of the flow of goods and services produced in an economy over a period of time usually a year. It is essential to calculate the national income of a country in order to determine if its economy is growing or not.
    The following are the methods of measuring national income :
    PRODUCT METHOD : This is the calculation of national income by adding up all the final goods and services produced in a year. This method is also known as value-added to GDP method. However, final goods as mentioned above refers to goods that are ready for consumption and are not further used to create more goods. Those ones are rather referred to as intermediate goods. They are not added again to avoid duplicate counting.
    INCOME METHOD : This method has to do with the addition of flow of factor income which refers to the four factors of production which are 1)capital,2) land, 3)labour and 4)entrepreneurship. It was important to note that the reward of capital is interest, the reward of land is rent, the reward of labour is wages and salary and the reward of entrepreneurship is profit. When calculating national income using the income method, earnings of self employed individuals such as doctors, etc are not added to avoid double counting. They are rather classified as mixed-income.
    EXPENDITURE METHOD : Expenditure method calculates national income by summing up the flow of expenditures. Government consumption expenditure, gross capital formation (public and private), and net exports are also factors to be considered (Export-Import).GDP by expenditure method at market prices = C+ I + G + (X – M), where (X-M) is net export which can be positive or negative depending on how much goods were exported.

  51. Avatar Odumegwu Happiness Oluchi2020/242942 says:

    1. The Product Method:In this method, all goods and services produced during the year in various industries are added up. This is also known as value-added to GDP or GDP at the sector of origin’s cost factor. India includes the following items: agriculture and allied services; mining; development, construction, the supply of electricity, gas, and water, transport, communication, and trade; banking and insurance; real estate and property ownership of residential and commercial services and public administration and defence and other services (or government services). It is, in other words, the amount of the added gross value.2. The Income Method:In a nation that produces GDP during a year, people earn income from their jobs. Thus the sum of all factor incomes is GDP by revenue method: wages and salaries (employee compensation) + rent + interest + benefit.3. Expenditure Method:This approach focuses on products and services generated during one year within the region.GDP is subtracted from the portion of consumption, investment, and government spending expended on imports. Likewise, all manufactured components, such as raw materials used in the manufacture of products for sale, are also exempt.

  52. Avatar Anike chinemerem Patricia RegNo: 2019/249725 says:

    1. The Product (Output) Method
    2. The Income Method
    3. The Expenditure Method.

    1. The Product (Output) Method:
    The most direct method of arriving at an estimate of a country’s national output or income is to add the output figures of all firms in the economy to get the total value of the nation’s output. The outputs can be grouped into certain product categories corresponding to industries or to sectors (such as the primary sector, secondary sector and the tertiary sector).

    Problems:

    When we use the output approach, one major problem arises. This is known as the problem of double counting. It arises due to the fact that the industry’s output is often the input of another industry. This is why when we add up the values of all sales, the same output is counted again and again as it is sold by one firm to another. This problem is avoided by using the concept of ‘value added’, which is the difference between output value and input at each stage of production.

    In other words, each firm’s value added is the value of its output minus the value of the inputs that it purchases from other firms. Thus, an automobile manufacturing company’s value added is the value of its output (i.e., the market value of cars) minus the value of tyres and tubes, glass, steel batteries it buys from other firms as also the values of any other inputs, such as electricity and fuel oil that it purchases from other firms.

    As Lipsey has put it, “A firm’s output is defined as its value added; the sum of all values added must be the value, at factor cost, of all goods and services produced by the economy.

    While referring to the concept of value added economists draw a distinc­tion between intermediate goods (like tyres and types which are used as inputs into a further stage of production) and final goods that are the outputs of the economy after eliminating all double (multiple) counting and are used for consumption and not for further production.

    In our example, tyres and tubes, glass, steel, electricity were all intermediate goods used at various stages in the production process while cars were final goods. In fact, all investment products used at various stages in the process lead to the final produce, car.

    In short, the output approach measures national output called gross domestic products (GDP) in terms of the values added by each of the sectors of the economy. To avoid the problem of double or multiple counting we must either use the value added method or count the total value of all final products.

    If we use the value added method of estimating national output, we have to include exports but exclude imported materials and services. Imports are automatically excluded since we only record the values added in this country. This will give us the GDP. In general, the GDP is measured at market prices, giving the market value of all output. To this, we must add (or from this we must subtract) the net factor property.

    Income from Abroad:

    What is the gross national product? GNP is the name we give to the total rupee value of the final goods and services produced within a nation during a given year. It is the figure one arrives at when one applies the measuring rod of money to the diverse goods and services—from computer games to machine tools—that a country produces with its land, labour, and capital resources and it equals the sum of the money values of all consumption and investment goods, government purchases, and net exports to other coun­tries.

    GNP is used for various purposes, but the most important one is to measure the overall performance of an economy.

    The gross domestic product (or GDP) is the most comprehensive measure of a nation’s total output of goods and services. It is the sum of the dollar values of consumption, gross investment, government purchases of goods and services, and net exports produced within a nation during a given year.

    2. The Income Method:
    The second approach is to measure incomes generated by production.
    Income from employment (item no. 1 in the Table) is wages and salaries. Income of self-employed persons (item number 2) includes both wages and return on capital owned by self-employed persons (who are treated as firms in microeconomics). Item number 3 is to be interpreted in a broad sense. It includes not only the rent of land but also the rent of buildings, plus royalties earned from patents and copyrights. Thus, it is a partly of return to land and partly a return to capital. Item number 4 is the major part of return on capital to the private sector.

    Likewise, item number 5 is the major part of the return to capital for the public sector. Item number 6 is depreciation which is the reduction in the value of capital goods due to their contribution to the production process. Depreciation or capital consumption allowance represents that part of the value of output which is not earned by any factor but is the value of capital used up in the process of production. This depreciation is to be treated as part of the gross return on capitaL.

    Item number 8 involves stocks and its appreciation. The first one is concerned with the valuation of stock of goods produced but not sold in the same year. These are valued at market prices. This creates a problem in the sense that there is need to record as part of current output (and income) the profits that will be received by the firm only when, and if at all, the goods are sold. Thus, if aggregate inventories of Indian compa­nies go down, national income will raise.

    In a year of inflation, it is necessary to make an adjustment for the purely monetary changes in the value of stocks. It is so because a rise in prices increases the value of existing stocks even when there is no change in their volume. As G.F. Stanlake has put it, “In order to obtain an estimate of the real changes in stocks it is necessary to make a deduction equal to the ‘inflationary’ increase in value.”

    This deduction is treated as stock apprecia­tion in the national income tables (see Table 1). Thus, in order to avoid distortions caused by stock appreciation in an inflationary period, a correc­tion has to be made to eliminate changes in the value of stocks due to price changes alone.

    As Lipsey has put it, changes in stocks only contribute to changes in GDP when their physical quantities change. The correction for the change in the value of existing stocks yields GDP, valued at factor cost and calculated from the income side of the economy.
    In short, the income approach measures GDP “in terms of the factor-in- come claims generated in the course of producing the total output.”

    Transfer Income:

    When we use the income method we have to exclude all transfer incomes such as unemployment benefit, widow pension, child benefits or even interest on government bonds. These are transfer incomes since they are not payments for services rendered — there is no contribution to current real output by the recipients.

    Thus, while using the income method we must only take into account those which have been earned for services rendered and in respect of which there is some corresponding value of output. Interest paid on government bonds is to be excluded for a simple reason.

    The government imposes taxes on some people to pay interest to others. But, the total output (or income) of society does not increase in the process. We may also refer to private transfer in this context. If you receive a gift from your father who is also a resident of India, India’s national income will remain unchanged.

    Disposable Income:

    Factor incomes are normally recorded gross (i.e., before taxes are paid), because this is the measure of the factors’ contribution to output. If we subtract all direct taxes as also provident funds contributions and interest paid by individuals on loans (say to HDFC or to Citi Bank credit cards) from national income we arrive at disposable income. It is so called because people can dispose it off as they wish.

    Personal Incomes:

    National income is not the sum of all personal incomes. The reason is simple. All the income generated in production does not find its way into personal incomes. A certain portion of company profit is added to reserves (and not distributed as dividends among shareholders). Likewise, the profits of public sector (state) enterprises are appropriated by the government and not by persons. But, these undistributed surpluses must be added on to the total of factor incomes received by persons to arrive at national income.

    Net Factor (Property) Income from Abroad:

    It is also to be noted that some of the income derived from economic activity within the country will be paid to foreign owners of assets located in India, while income from Indian-owned assets abroad will be moving in the opposite direction. The income account, therefore, must be adjusted by including the item ‘net income from abroad’. Thus, if you receive a dividend income $ 1,000 from an U.S. multinational it will be a part of India’s national income.

    Stock Adjustment and Capital Gains and Losses:

    Finally, stock appreciation adjustment has to be made in order to eliminate the element of windfall gain in the profits received. Similarly, capital gains and losses are to be excluded from national income to avoid double count­ing. Thus, if you sell shores in the stock exchange and make a gain of Rs. 100,000 it will not be a part of India’s national income. However, if a certain portion of it includes factor payment such as broker’s commission it will be a part of national income.

    3. The Expenditure Method:
    From the expenditure side national income is calculated by adding up the flows of expenditure needed to purchase the nation’s output. However, while estimating the value of national product by the expenditure method we must only record final expenditures.

    We have to exclude all the expen­diture on intermediate goods and services. While measuring national in­come total final expenditure (TFE) is divided into four broad categories: consumption, investment, government expenditure (spending), exports and imports. These four components may now be further developed.

    Consumption:

    Consumption expenditure refers to all purchases by households of cur­rently produced goods and services, except new houses which are counted as investment. Secondly, consumption of second hand goods like used cars is to be excluded to avoid double counting. Thirdly, we have to measure purchases of goods and services made in a year. We need not measure their actual consumption that occurs during the year (or any other period under consideration).

    Investment:

    Investment is expenditure on currently produced capital goods like plant and equipment and housing. Stocks are also included. Investment may be gross or net. Gross investment less depreciation is net investment, or net addition to (purchase of) society’s stock of capital.

    Government Expenditure:

    Money that government spends falls into two categories, one is called transfer payments. These are money paid out for which nothing is given back to the government. One good example is pension paid to retired people. There is a sort of transfer of money from tax-payers to the people receiving pensions.

    These transfer payments are not part of the GNP, since they do not arise from production. It is government spending for goods and of services that enters the GNP. Thus, the purchase of a wagon for the Railway Board and the wages of postal workers are put of the GNP.

    Only government expenditure on currently produced goods and services is to be included. This is known as exhaustive expenditure. All transfer expenditure is to be excluded to avoid double counting. As Lipsey has put it, “All government payments to factors of production in return for factor services rendered or payments for goods and services are counted as part of the GDP.”

    Examples are wages and salaries of government employees, government expenditure on goods purchased from farmers for distribution through the public distribution system (ration shops) and on medicines purchased from the private sector for distribution through government hospitals.

    Exports and Imports:

    Since exports represent foreigners’ expenditure on domestic output these are included in GDP. Likewise imports are domestic consumers’ expenditure on foreign goods. Hence, they are not a part of GDP. In the language of Lipsey, “expenditure approach measures the GDP in terms of the categories of expenditure required to purchase the total output of society”.

    Market Price Measure Vs. Factor Cost Measure

    National expenditure is measured at market prices. These prices differ from the factor cost values by the amount of taxes and subsidies they contain. Thus, national income at market price-indirect taxes + subsidies = national income at factor cost.

    All these measures of national income are supposed to give the same final figure. Any discrepancy among the three measures is due to statistical error. This is known as rounding-up error or residual error, i.e., the error of calculation (not due to any conceptual or methodological problem).

    Problems:

    However, various measurement problems crop up in practice.

    These are the following:

    1. Price Level Changes:

    Firstly, price level changes create complications. Such changes make it difficult to compare the value of output in one year with that of another year. Do we express statistics in terms of market prices or constant prices?

    If in terms of market prices, then figures will be distorted by inflation even though national output may have remained the same. To overcome this, statistics are often expressed in terms of constant prices. This means that a particular year’s prices are chosen to calculate the value of output. In India, for example, 1980-81 is taken as the base year.

    2. Public Goods:

    Secondly, difficulties arise in case of public goods like road, hospitals, defence, schools, etc., which do have market prices. They are parts of GDP because they satisfy human wants and make use of scarce resources. So, the solution lies in measuring their values ‘at cost’. The salaries of government school teachers and policemen are taken as a meas­ure of the values of their outputs.

    The education and health expenditures are included at their cost since they are obviously no different from similar services for which people pay. All government services are therefore included at cost in national output despite the argument that in some instances this could amount to double counting because these services are financed out of people’s taxation.

    3. Self-Supplied Goods and Services:

    Thirdly, people produce same goods and services for themselves. For example, many teachers teach their own children, farmers produce food for themselves and many people drive their own cars, and many people even make their own clothes. In such cases, it is not possible to arrive at a market measurement of the value of the output.

    If identical goods and services are sold in the market place it is possible to give self-provided goods and services an imputed valuation — an estimate of their values can be included in the national income figures. This method is usually used in case of owner-occupied houses (i.e., income from house property).

    The market rents of similar properties are used as measuring rod for the imputed rents of premises occupied by their owners. If there is no reliable market indicator, the assumed (imputed) value must be an arbitrary estimate or the national income accountant may decide to omit the commodity (service) from the calculations of the national output. This latter solution is adopted in case of free services rendered by house­wives like coaching their own children, or cooking food or drawing water from the roadside tube-well or even washing clothes.

    In short, certain goods and services may be provided by a person for himself or herself and it is very difficult to include these in calculations altogether. Many of these self-supplied goods and services will be omitted from national income. However, an imputed value is given to owner occupied houses and an estimate is made of the value of food consumed by farmers themselves.

    Similarly, some goods and services, e.g., services given by housewives, cannot be valued at all and are omitted. However, this creates a difficulty because a housekeeper’s services are calculated in national income.

    4. Underground Economy:

    Moreover, work done in the ‘Black or Underground Economy’, for which there is no official record, is not included in calculations. This is a serious problem in all market-based economies.

    5. Double Counting:

    This problem arises because the outputs of some firms are the inputs of other firms. There are two possible ways of tackling this problem. Prima facie, national income can be measured by adding the values of the final products’.

    A preferable alternative is to total the values added at each stage of produc­tion. Double counting is a common problem faced by all countries. Transfer payments should not be included in the calculations of GNP. In addition, from the value of the products of industries must be deducted the cost of raw materials and products and services provided by other industries. Only the value added is included. Stock appreciation must also be deducted. This occurs when the value of stocks increases because of inflation. But, it represents no increase in real output.

    6. Factor Cost:

    The value of the national output is measured at factor cost, that is, in terms of the payments made to the factors of production for services rendered in producing that output. As Stanlake has put it, “Using market prices as measures of the value of output can be misleading when market prices do not accurately reflect the costs of production (including profits)”.

    In fact, the market prices of most of the commodities that we buy include indirect taxes and some of them include an element of subsidy. Therefore, if we are to arrive at the factor cost value, we have to deduct taxes on expenditure and add subsidies to the market price valuations. It would be misleading to the figures for national income at market prices since it would mean that the value of national output could be increased by raising the rates of indirect taxes such as sales tax or excise duty.

    So, in spite of the supreme importance of the national income estimates, a lot of difficulties arise in calculating national income properly.

    The follow­ing are some major difficulties:

    (a) Inadequacy, non-availability and unre­liability of accurate data relating to the various sectors of the economy;

    (b) Difficulties of reducing the various, diverse economic activities of the people to a common measurable denominator;

    (c) Difficulties in excluding raw materials and semi-finished goods from the estimates of national income, in order to avoid the errors of double counting;

    (d) Difficulties in discovering true transfer payments (e.g., unemployment allowances or interest on public debts, relief payments or old-age pensions) for their exclusion from the national income estimates;

    (e) Difficulties in making proper adjustment of the changes in the price-level in the national income estimates;

    (f) Difficulties in treating some major items like government taxes and expenditure, the earnings from abroad, etc., in calculating the national income;

    (g) Difficulties in expressing the national product in terms of money owing to the fluctua­tions in the value of money, existence of non-mentioned transactions, unpaid services and non-monetary economic activities, voluntary work, illegal transactions, etc.; and

    (h) Conceptual difficulties in defining national income properly for calculating it with accuracy. These difficulties are also to be faced in estimating India’s national income.

  53. Avatar ONOKA ESTHER CHIKA says:

    NAME:ONOKA ESTHER CHIKA
    REG NO:2020/242905
    COURSE: ECO 102The national income of a country can be measured by three methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method.1. 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. The product method is based on returns made by firms and public corporations concerning the annual value of their output. In most countries these returns are obtained through the census of production.Final goods here refer to those goods which are directly consumed and not used in further production process.Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate god) at each stage of production is calculated and these are summed up to arrive at GDP.GNP – Imports = Gross Domestic Product.2. Income 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.The income method of calculating the national incomes is based on figures collected from the income tax departments. In advanced countries the majority of people have to submit returns about income for assessment. So a fairly accurate estimate of total incomes can be obtained in this way. By contrast, in a country like India, where few people make tax returns or where there is wide-scale tax evasion, the income method is not much reliable.Besides, there are some self-employed persons who employ their own labour and capital such as doctors, advocates, etc. Their income is called mixed income. The sum-total of all these factor incomes is called NDP at factor costs.3. Expenditure Method:In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. A third way of arriving at this same total is to add up the total national expenditure. We have to include private and government expenditure and the value of newly — created capital. If everything we buy were produced at home and nothing were sold abroad, then the total national expenditure would be equal to the total income and to the total national product. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

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  55. Reg no : 2020/245088
    There are four method of measuring national income
    1.value added method : this method of measuring national income is the value added by industries,the difference between t value of material output and input at it stage of production.
    Product method: this is the total value of final goods and services in a country during the years calculated at market price,to find out the GNP,t the data of all production activities, such as agricultural products, wood received from forest etc.
    3.incom method: according to this method the net payment received by all citizens of a country in a particular year are added up l.e noet income that accure to all factor of production.
    4.Expenditure method: according to this method the expenditure incurred by the society in a particular year is added together and ir include personal consumption expenditure net domestic investment.

  56. Avatar Kingsley Bright Ajogu . Reg. No: 2020/249219. Dept .: PIC says:

    Dept.:Pure and industrial chemistry
    Reg no.: 2020/249219
    The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method.
    1. 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 process.
    National income
    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.
    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.
    The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.
    2. Income Method:
    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.
    3 . Expenditure Method:
    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  57. Avatar Onovo Daniel Chukwuebuka Reg no:2020/243930 says:

    1) Product method: In this method,all goods and services produced during the year in various industries are added up.This is also known as value added to GDP or GDP at the sector of origin’s cost factor. India includes the following items: agriculture and allied services, mining, development, construction,the supply of electricity,gas,and water, transport, communication and trade, Banking and insurance;real estates and property, ownership of residential and commercial services and public administration and defense and other services (or government services).it is,in other words,the amount of the added gross value.

    2)Income method:in a nation that produces GDP during a year, people earn income from their jobs. Thus the sum of all factor incomes is GDP by revenue method: wages and salaries (employee compensation) + rent+interest +benefit.

    3) Expenditure method:This approach focuses on products and services generated during one year within the region.
    GDP is subtracted from the portion of consumption, investment,and government spending expanded in imports.likewise,all manufactured components,such as raw materials used in the manufacture of products for sale,are also exempt.Thus GDP by expenditure method at market prices is net export.which can be positive or negative.

  58. Avatar Mozie Chiamaka Marycynthia. Reg no - 2020/242566. says:

    1) product method
    2) Income method
    3) Expenditure method.

    1) Product method – The national income is measured as a flow of goods and services. Intermediate goods are not included when measuring because it has been added to the value of the final goods to avoid double counting. The money value of the final goods is calculated as the GDP at market prices.
    2) Income method – The national incone is measured as the flow of income factor. We have four factors of production : land, labour, capital and entrepreneurship. The incomes ( rent for land, wages or salaries for labour, profit for capital etc.) made from all this factors are called NDP at factor cost.
    3) Expenditure method – The expenditure method is a system for calculating the Gross Domestic Product i.e GDP. It consists of consumption( C), investment( I), government expenditure(G), net import(m) and export(x) ( x – m). All are added to calculate the GDP(Y).
    Y = C + I + G + ( x – m).

  59. Avatar Mozie Chiamaka Marycynthia. Reg no - 2020/242566 says:

    1) product method
    2) Income method
    3) Expenditure method.

    1) Product method – The national income is measured as a flow of goods and services. Intermediate goods are not included when measuring because it has been added to the value of the final goods to avoid double counting. The money value of the final goods is calculated as the GDP at market prices.
    2) Income method – The national incone is measured as the flow of income factor. We have four factors of production : land, labour, capital and entrepreneurship. The incomes ( rent for land, wages or salaries for labour, profit for capital etc.) made from all this factors are called NDP at factor cost.
    3) Expenditure method – The expenditure method is a system for calculating the Gross Domestic Product i.e GDP. It consists of consumption( C), investment( I), government expenditure(G), net import(m) and export(x) ( x – m). All are added to calculate the GDP(Y).
    Y = C + I + G + ( x – m).

  60. Avatar Umeh Success Precious says:

    Name: Umeh Success Precious
    Reg no: 2020/243839
    Course: Education Economics
    Email: successprecious41@gmail.com
    Methods of measuring national income

    What is national income: according to the modern definition, national income can be defined as the net output of commodities and services flowing during the year from the country’s productive system in the hands of the ultimate consumers.

    METHODS OF MEASURING THE NATIONAL INCOME
    There are 4 methods of measuring national income
    1. Product method: it is the total value of final goods and services produced in a country during a year is calculated at market prices. In this measurement only the final goods and services are included and the intermediary goods and services are left out.
    2. Income method: the net income payments received by all citizens of a country in a particular year are added up.
    3. Expenditure method: the total expenditure incurred by the society in a particular year is added together including personal consumption expenditure, net domestic investment, government expenditure on goods and services and net foreign investment.
    4. Value added method: it is the value added by industries. It is the difference between the value of material outputs and inputs at each stage of production.

  61. Avatar OGBU PRECILIA ONYINYECHI says:

    NAME: OGBU PRECILIA ONYINYECHI
    REG NUMBER: 2020/241507
    EMAIL: preciliaogbu.241507@unn.edu.ng

    The methods of measuring the national income are as follows:
    (1)Product method
    (2) Income method
    (3) Expenditure method

    Explanations
    (1) Product method/value added method: ln this method, income is measured as a flow of goods and services. We calculate money value and final goods produced in an economy during a year. Final goods here refers to those goods which are directly consumed and not used in further production process. Goods which are further used in production process called intermediate goods.In the value of final goods, value of intermediate goods is already included therefore we do not count the value of intermediate goods in national income otherwise there will be problem of double counting , to avoid this,we can use the value_ addition method in which not the
    whole value of a commodity but value_addition (value of final good value of intermediate good at each stage of production is calculated and this summed up to arrive at GDP. The money value is calculated at market prices so sum total is the GDP at market prices.

    (2) Income method: Here, national income is measured as a flow of factor incomes which include labour, capital, land, and entrepreneurship. Labour gets wages and salaries, capital gets interest, land gets rent and entrepreneurship gets profits as their renumeration.
    (3) Expenditure method: Here income is measured as a flow of Expenditure. GDP is sum total of private consumption expenditure. Government consumption expenditure, gross capital formation (government and private) and net exports ( Exports_ imports).

  62. Avatar Ene blessing says:

    1. Product method:

    According to this method, the total value of final goods and services produced in a country during a year is calculated at market prices.

    To find out the GNP, the data of all productive activities, such as agricultural products, wood received from forests, minerals received from mines, commodities produced by industries, the contributions to production made by transport, communications, insurance companies, lawyers, doctors, teachers, etc. are collected and assessed at market prices.

    2. Income Method:

    According to this method, the net income payments received by all citizens of a country in a particular year are added up, i.e., net incomes that accrue to all factors of production by way of net rents, net wages, net interest and net profits are all added together but incomes received in the form of transfer payments are not included in it.

    The data pertaining to income are obtained from different sources, for instance, from income tax department in respect of high income groups and in case of workers from their wages bills.

    3. Expenditure Method:

    According to this method, the total expenditure incurred by the society in a particular year is added together and includes personal consumption expenditure, net domestic investment, government expenditure on goods and services, and net foreign investment. This concept is based on the assumption that national income equals national expenditure.

    4. Value method:

    Another method of measuring national income is the value added by industries. The difference between the value of material outputs and inputs at each stage of production is the value added. If all such differences are added up for all industries in the economy, we arrive at the gross domestic product.

  63. There are three methods of measuring National Income viz:
    1. Income method.
    2. Product method.
    3. Expenditure method

    1. Income method.
    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 capitals such as doctors, advocates, CA’S, etc. Their income is called mixed income. The sum total of all these factor income is called NDP at factor costs.

    2. Product method.
    This approach is to estimate national income consists of measuring the output of all procedures and to deduct from this total the intermediate purchases. An unduplicated figure of this kind can be obtained separately from each producer. This represents the value of the intermediate products with which he starts and hence his contribution to the total value of production. The sum of all final products measured at factor costs, net of depreciation on fixed capital assets and corrected for income payments to and from abroad, would equal national income.

    3. Expenditure method.
    From the expenditure side national income is calculated by adding up the flows of expenditure needed to purchase the nation’s output. However, while estimating the value of national product by the expenditure method we must only record final expenditures.
    We have to exclude all the expenditure on intermediate goods and services. While measuring national income total final expenditure (TFE) is divided into four broad categories: consumption, investment, government expenditure (spending), exports and imports. These four components may now be further developed.

  64. Avatar Mozie Chiamaka Marycynthia. Reg no - 2020/242566. says:

    1) product method
    2) Income method
    3) Expenditure method.

    1) Product method – The national income is measured as a flow of goods and services. Intermediate goods are not included when measuring because it has been added to the value of the final goods to avoid double counting. The money value of the final goods is calculated as the GDP at market prices.
    2) Income method – The national incone is measured as the flow of income factor. We have four factors of production : land, labour, capital and entrepreneurship. The incomes ( rent for land, wages or salaries for labour, profit for capital etc.) made from all this factors are called NDP at factor cost.
    3) Expenditure method – The expenditure method is a system for calculating the Gross Domestic Product i.e GDP. It consists of consumption( C), investment( I), government expenditure(G), net import(m) and export(x) ( x – m). All are added to calculate the GDP(Y).
    Y = C + I + G + ( x – m).

  65. Avatar Anozie mmesoma miracle says:

    Methods for measuring national income:
    Income methods
    Product/value added method
    Expenditure method.

    Income method: National income is calculated using this method as a flow of factor income.labour, capital,land and entrepreneurship are the four main component of production.

    Product/value added method: National income is calculated using this method as a flow of goods and services. during a year,we determine the monetary value of all final goods and services generated in an economy.

    Expenditure method: national income is calculated using this method as a flow of expenditure. The gross domestic product (GDP)is the total of all private consumption expenditure.

  66. Avatar Ayogu Anita chinenye says:

    Reg number:2020/242362
    The ways of measuring national income includes,
    1) 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 a year.final goods here refer to goods that are directly consumed and not used in further production process.
    2) income method: in this method national income is measured as a flow of factor incomes . they are generally four factors of production which are labour, capital,land and entrepreneurship . labour gets wages and salaries, capital gets interest, land gets rent and entrepreneurship gets profit as their remuneration.
    3) Expenditure method: in this method national income is measured as a flow of expenditure .GDP is sum total of private consumption expenditure, Government consumption expenditure , Gross capital formation (Government and private) and net exports (export-import)

  67. Avatar ERIUGO MARY CYNTHIA MMESOMA says:

    The following points will highlight the three important methods to measure the national income.

    Method # 1. Output (Product) Method:
    The product method is based on returns made by firms and public corporations concerning the annual value of their output. In most countries these returns are obtained through the census of production.

    In India, a full census is taken every 10 years and sample censuses are taken in the intermediate years. Additional information may now be obtained from returns with respect to sales tax and/or excise duty.

    ADVERTISEMENTS:

    National income is measured by the output method by calculating the total value of goods and services produced in the country during the year. The money value of goods and services produced in an economy in an accounting year is called Gross National Product (GNP). It is defined by J. R. Hicks as “the collection of goods and services reduced to a common basis by being measured in terms of money.”

    In most countries GNP or GDP is measured at current (market) prices. Table 17.1 shows the national income of a hypothetical economy in an accounting year.

    Table 17.1: The National Product of a Hypothetical Economy 1998-99:

    The National Product of a Hypothetical Economy

    Thus, we see that all types of activities are covered—the primary sector, e.g., agriculture, forestry and fishing; secondary sector, e.g., manufacturing and construction; and tertiary sector, e.g., distribution, transport, banking and insurance.

    ADVERTISEMENTS:

    The national product is the total value of everything produced in the country. It is a measure of the goods and services becoming available to the nation for consumption or adding to wealth.

    Problems:
    When we use the output method certain problems arise:

    (i) Unpaid Service:

    ADVERTISEMENTS:

    The GNP figure includes only productive activity for which payment is received. Any unpaid service (s) will not be included. For example, housewives do a lot of work such as cooking, nursing, drawing of water, coaching children and so on. But they are not paid specifically for this. Any housekeeping allowance given to the wife by her husband is regarded as a transfer within the family. If, however, another person were employed and paid to undertake the cleaning of house, the payment to him (her) would be included in the figures, because she is providing a service for which she is being paid.

    Thus, any service which people undertake for themselves will be excluded from the figures. This indicates one area for caution in comparing national income figures for different countries. In less developed countries like India, people do more things for themselves — grow their own food, make their own clothes, etc. They do not pay for all the commodities and services they need. The national income of such a country will be that much less because most people provide so many unpaid (free) services for themselves.

    (ii) Double Counting:

    Another problem is drawing up the production figures is the need to avoid double-counting, i.e., including the same item twice. For example, the value of the output of the steel industry is calculated, but some of the steel has gone to the car industry to be used in the production of cars.

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    So if we simply calculate the value of the output of the car industry and add it to the figure for the steel industry, then some of the steel has been included twice in the calculations — once as steel and once as part of the cars.

    In order to avoid this problem of double counting, it is only the value added by each industry which is included, i.e., the value of the industry’s output minus the value of the materials, etc. bought from other industries. Thus, we need figures of only the final selling values of goods and services.

    (iii) Stock Appreciation:

    Another problem arises due to stock appreciation. Some final goods will be added to stocks and not incorporated in other goods in the current year. On the other hand, the value of current output will include the using up of stocks inherited from the past. These problems are dealt with by including net additions to stocks, which may be positive or negative, in the domestic product.

    Net addition to stock must refer to additions to the physical stock of assets and not just the money value (price x quantity) of stocks. The latter can rise because the normal accounting of firms writes up the value of stocks as price rise. Such a rise in the book value of stocks is recorded as stock appreciation.

    ADVERTISEMENTS:

    This item takes account of the fact that stocks of goods will increase in value from one year to the next simply because of price rise. For example, if there was a stock of 100 cars in a factory last year and the same number of the same type of cars this year, the value of the stock will be greater this year, because the price of the cars has risen—yet there has been no increase in the number of cars involved.

    A deduction, therefore, needs to be made to remove the influence of price changes on stocks. In other words, stock appreciation must be subtracted from the estimates of stock changes. (As stock appreciation affects the calculation of profits, a similar deduction has to be made when using the income method).

    (iv) International Transactions:

    The value of goods and services produced within the country includes their import content. Imports yields incomes to owners of resources in other countries. They are part of the domestic products of other countries. Hence, they must be deducted from the GNP. Exports yield income to the domestic factors. So they are included in the domestic product. Their import is dealt with in the general deduction of imports.

    ADVERTISEMENTS:

    So we arrive at the following estimate:

    GNP – Imports = Gross Domestic Product.

    The domestic product is the value of every­thing produced in a particular territory. It differs from the national product by the amount of any factor incomes paid to (or by) non­residents. This interest paid to foreigners who have provided capital in a country is included in the domestic product since it is part of the value of what has been produced in the country. But it is excluded from the national product since the income does not accrue to residents in the country.

    Method # 2. The Income Method:
    The income method of calculating the national incomes is based on figures collected from the income tax departments. In advanced countries the majority of people have to submit returns about income for assessment. So a fairly accurate estimate of total incomes can be obtained in this way. By contrast, in a country like India, where few people make tax returns or where there is wide-scale tax evasion, the income method is not much reliable.

    ADVERTISEMENTS:

    The income method of calculating national income is to work out the total of all incomes received by people and organizations in the country. The national income includes the income earned by all the resources of the country from their participation in productive (i.e., money-earning) activities.

    Everything that is produced in an economy belongs to someone; it may be kept by the owner of the capital used in producing it, in which case it represents the interest on his capital; it may be shared out directly among those whose labour has produced it, as with fishermen, in which case it represents their wages; or it may be bought by another man with the money income which he has earned in another form of production. It, therefore, follows that the total national product must be equal to the total national income. The following table shows the different types (sources) of income in a hypothetical economy.

    Table 17.2: National Income of a Hypothetical Economy 1998-99:

    National Income of a Hypothetical Economy: 1998 -99

    The national income can thus be measured by adding up all the incomes earned by the owners of the factors of production; it includes the total of all wages and salaries earned, rents and royalties, interest received on loans, and the profits of companies, private businesses, farms, fisherman and traders. This is called national income at factor cost, because it shows the costs of production as it is paid out or imputed to the factors employed.

    One can compare this with the national product and the total will be the same. It is so because the national product is the total value of everything produced in the country and is a measure of the goods and services becoming available to the nation for consumption or adding to wealth (i.e., investment).

    Problems:
    ADVERTISEMENTS:

    (i) Mixed Income:

    Although this table attempts to separate the payments to different factors of production, ‘mixed’ income are derived from a mixture of factors. So, in practice, it is virtually impossible to separate the returns to land, labour and capital. An example is a wheat farmer, whose income is derived from land, capital and labour—all supplied by himself. Again, retailers (such as grocers) provide both labour and capital, but we cannot find out how much each factor has earned.

    (ii) Transfer Income:

    It is important to include in the calculations only those incomes which correspond to the production of goods and services. Otherwise there may be double- entry, i.e., the same income may be counted twice. For example, a worker in a jute mill may receive Rs. 2,000 per month, of which Rs. 302 is taxed away by the government.

    A freedom fighter receives a pension of Rs. 300 per month. The total income for both is Rs. 2,300; yet only Rs. 2,000 of this corresponds to productive activity. Therefore, the pension should not be included. The figure for total income would then be Rs. 2,000 — corres­ponding to the amount of production involved.

    There are other payments which do not correspond to the production of goods and services—unemployment compensation and other social security payments, interest on government bonds, subsidies to poor families, scholarships to students, pocket money paid by parents to children, gift by one individual to another (within the same country). Such incomes are paid to the recipients out of the earnings of producers by means of taxes, insurance contributions and gifts. These incomes differ from the incomes of the factors of production, called factor incomes.

    ADVERTISEMENTS:

    Interest on national debt is also counted as a transfer income of its recipients because it is paid out of taxes without any current goods and services being made available in return. Such payments are known as ‘transfer payments’. These are to be excluded when calculating national income.

    These are excluded from national income because such incomes do not represent payment for contributing to the production of goods and services. Thus, recipients of retirement pensions, family allowances, students’ grants and social security benefits do not make any current contribution to society’s output of goods and services.

    Taxes which transfer income from the factors of production to the relevant bene­ficiaries are called transfer payment.

    The sum-total of all incomes includes both factor incomes and transfer incomes. Since the latter are paid of the former without any goods and services being made available as a result, they exaggerate the flow of income in real terms. They are double-counted, once as factor incomes and again as transfer incomes. They must, therefore, be excluded from national income.

    (iii) Imputed Income:

    One item which often creates problem is ‘ownership of dwellings’. People who let out houses for rent are providing a service. So the rents received by them must be included in the national income figures. But account must also be taken of owner- occupied houses. No rent is actually paid here. But the houses provide the same service to the dwellers as rented accommodation. The problem is overcome by imputing a rent to such houses, i.e., the amount the owners would probably have received if they had rented the houses.

    ADVERTISEMENTS:

    (iv) Government Services:

    There are many services provided by the government of a country which satisfy the collective wants of the community as opposed to the individual wants of the citizens. Thus, administration through the civil service, defence by the armed forces, protection by the police force, justice through the law courts, health care and education are provided by the state.

    Each citizen does not pay according to the amount of such services that he (or she) wants. A pacifist has to help to pay for defence; a wealthy person has to help in the provision of social health and education services which he or she may never use. This list of anomalies could be greatly extended. Is it, then, realistic to include the incomes derived from producing such services as part of the income derived from satisfying wants?

    In fact, government services of this kind are included in the national income on the ground that the community pays for them simply because it surely needs them.

    (v) Net Factor Income from Abroad:

    Some people and firms earn income by producing goods and services or owning property in other countries. Such incomes will not be included in calculations based on the earnings of factors within the country (the domestic income) and must be added to the total.

    ADVERTISEMENTS:

    On the other hand, some of the domestic income is earned by non-residents as a result, for example, of the operation of foreign firms within a country. These incomes must be deducted when computing the national income. These two adjustments can be made together by adding net income from abroad if it is positive or by deducting it if it is negative.

    Method # 3. The Expenditure Method:
    A third way of arriving at this same total is to add up the total national expenditure. We have to include private and government expenditure and the value of newly — created capital. If everything we buy were produced at home and nothing were sold abroad, then the total national expenditure would be equal to the total income and to the total national product.

    But, of course, every country trades with others to a certain extent. Thus, unless the value of everything they export is equal to the value of their imports, national expenditure will be either greater or less than the national product and income.

    Some countries export more than they import. They have an export surplus, which we may regard as a balance of unspent income. In such countries we have, therefore, to include the export surplus as an item in our total national expenditure. If there is an import surplus we have to deduct this from the total national expenditure.

    For balancing this third account with the other two, we have to make one further adjust­ment. Expenditure at market prices includes, for some goods, a payment to the government as indirect tax like sales tax or excise duty. These taxes are not really a payment for any goods or services. So we deduct them from total expenditure to arrive at a final figure which is equal to the value of the national product or national income at factor cost.

    The following table illustrates this method:

    National Expenditure of a Hypothetical Economy: 1998-99

    The table 17.3 shows that the major portion of the national product is enjoyed by the people as food, clothing, bicycles and other ‘consumer’ goods. A certain portion goes abroad as an export surplus. It is a form of savings which can later be turned into imports, thus enabling the country (under consideration), if necessary, to consume more at some future time than its current national product. Two other components of aggregate expenditure are: private investment (capital formation) and government expenditure (on currently produced goods and services).

    There are two other groups of spenders in the country whose expenditure must be included, namely, public authorities and firms. (Public authorities consist of central and local govern­ments). With regard to the second item in Table 17.3, we are concerned only with the expenditure of public authorities on goods and services.

    Expenditure on such items as pensions, student grants (i.e., loans and scholarships), unemployment benefit, etc. is not included, because such expenditure does not correspond to any production in the economy. The inclusion of such expenditure would not give a true indication of the value of the goods and services produced in the economy during the year. It is only expenditure on goods and services which is relevant here.

    The expenditure method depends on some­what less accurate statistics because of the great number of retail outlets where most of the relevant transactions take place. Information about retailing, wholesaling and the provision of some service is obtained from the Census of Distribution. Additional information is obtained from sales tax (and excise duty) returns.

  68. Avatar Odinikpo says:

    Odinikpo Chidera Marycynthia
    Science Laboratory Technology
    200L

    Methods of measuring National income

    1. Production method:
    This method involves the measurement of all final goods and services. The money value of all the final goods and services produced anually in an economy is being calculated. These goods are those directly consumed and not used in further production process. It can also be termed as valued added method.

    2. Income Method
    This method measures income from the side of payments made to the primary factors of production for their productive services in an accounting year.The income is gotten by adding up factor incomes generated by all the producing units located within the domestic economy during a period of account in which the resulting total is called Domestic Income or Net Domestic Product at FC (NDPFC)- By adding net factor income from abroad to domestic income, we get National Income (NNPFC).

    3. Expenditure Method
    The expenditure method is a system for calculating gross domestic product (GDP) that combines consumption, investment, government spending, and net exports. It is the most common way to estimate GDP. The expenditure method says everything that the private sector, including consumers and private firms, and government spend within the borders of a particular country, must add up to the total value of all finished goods and services produced over a certain period of time. This method produces nominal GDP, which must then be adjusted for inflation to result in the real GDP.

  69. Avatar Asogwa Chimezie Henry says:

    Asogwa Chimezie Henry
    2020/242572
    Economics department

    The methods of measuring National income are as follows:
    1. Expenditure approach
    2. Factor Income Approach
    3. Value Added or output approach

    1. The Expenditure approach: The expenditure approach measures GDP by adding together the expenditure of the four Economic units on goods and services. These are consumption expenditure (C) by households, investment expenditure (I) by firms, government purchases of goods and services (G), net exports of goods and services (NX).
    2. The Factor Income Approach: this approach measures GDP by adding together all the incomes paid by firms to households for the services of the factors of production they hire – wages and salaries for labour, interest for capital, rent for land and profit for the owners of the firm.
    Wages and salaries: This is the total payments by firms for labour services. It includes the net wages and salaries (called take home pay) that workers receive every month plus taxes withheld on earnings, plus all fringe benefits such as unemployment insurance and pension fund contributions.
    Interest for Capital: This includes the total interest income received by households on loans made by them minus interest payments made by households on their own borrowing. In other words, interest is net item in the sense that households interest payments are netted out from their interest income receipts.
    Rent: Is the income received by households from firms for the use of land and other rented inputs like housing. It includes imputed rent for owner occupied houses.
    Profits: These are profits made by the firms. It is usually called corporate profits. Some of the profits are paid out to the owner of the firm in the form of dividends and some are retained by the firms as undistributed profits.
    The addition of these factor income does not give GDP. The total rather gives net domestic income at factor cost. Net domestic income at factor cost is the sum of all factor incomes.
    3. The Value Added or Output Approach: GDP can be defined as the sum of the value Added in the economy during a given period. The term value added means exactly what it suggests. The Value added by a firm in production process is defined as the value of it’s production minus the value of the inputs (intermediate goods) bought from their firms.

  70. Avatar ONYIA JULIET ONYINYCHUKWU says:

    Onyia Juliet Onyinyechukwu
    Pure and Industrial Chemistry
    The various method of measuring the national income are:
    Product method
    Expenditure method
    Income method
    PRODUCT METHOD: This consist of measuring the output of all producers and to deduct from this total the intermediate purchases and un duplicated figure of this kind can be obtain separately from each producer
    EXPENDITURE METHOD: National income can also be measured as sum of expanditure on final goods and services less depreciation of capital assets
    INCOME METHOD: When goods and services are produced in the economy income also generate and distributed among the factor of production

  71. Avatar Ozota livinus ejiofor says:

    Name: Ozota livinus ejiofor
    Department: pure and industrial chemistry
    Reg.no: 2020/241135
    Email: ozotalivinus08168@gmail.com
    Eco 102
    Online assignment on introduction to economics
    Question: list and explain the various method to measure national income
    Answer
    The methods are as follows:
    (i) Product method
    (ii) Income method
    (iii) Expenditure method.

    1.Product Method:-
    Product method is otherwise known as value-added method or output method. According to this method the monetary value of all the final national output in a year is. found out. These outputs include agricultural industrial, mineral Land forest outputs. The monetary values of all the outputs are added together and the aggregate is called gross national product. As the moods are aggregated the totality of the output is called “final I product total”. According to the product method only the final goods are considered in determining national income. But no intermediate goods are considered to ascertain national income.
    Bidding up of the value of intermediate goods with the aggregate valuation of national income will give rise to .the problem of double mounting. Double counting means that certain items are counted more than once while calculating national income. Double counting Beans over estimation of values of certain goods. For example while calculating the value of final good bread, the values of wheat Bid flour should riot is incorporated with the aggregate value of BAL good bread. Here bread is the final product and what and Blur is intermediate products. If this is done, the estimation of national income will be faulty and inaccurate.
    The price of bread has already incorporated the price of wheat and cereal and “thus it unnecessary to add it further. If the prices of what starting from the cultivation to the final product are added the price of bread will be many times more of the actual price of bread. Thus while calculating national income, separate inclusion of the value of wheat and flour along with the value of final good bread will lead- to double counting and this should be avoided.
    This method is also called value added method as the value added or created of different stages of production is counted for estimating national income. Thus the national income is the sum total of value added by different producing units of an economy in the production process. Value added refers to the addition to the value of raw materials and other inputs during the process of production. In order to calculate value added the cost of intermediate production is deducted from the total value of output.
    According to this method the sale and purchase of ‘second hand’ goods are deducted from the national income. Incomes earned by certain illegal acts like smuggling, gambling and black marketeering are not also included in the national income. The sale and purchase of bonds and securities are not included in the national product. The net export is included in the calculation of national income.
    Depreciation replacement costs are to be deducted from the national income. Since the depreciation charge constitutes an item of cost, the total depreciation undergone by the machinery during one year must be deducted from the national income (GNP). The main advantage of this method is that it indicates clearly the relative importance of the different sectors of the national economy expressing their contribution to the national income of the country concerned. This method can be used only when correct and up- to-date statistical data are available.

    2. Income Method:
    Income method is also known as distributive is a method or factor payments method. According to this method the incomes received by the factors of agents of production of a country for their productive’ services during a year are added up to compute national income. The incomes in form of rent, wage; interest, profit are taken together to determine national income. The factor incomes can be grouped in the following categories, (a) Wages and salaries of the employees (b) Income of non-company business, (c) Rental incomes of persons, (d) Corporate profits and (e) Income from interest.
    The first category includes wages and salaries received the employees. The second category includes the incomes earn by individual proprietors, partners and self-employed persons. The third category includes rental incomes earned by individuals on agricultural and non-agricultural properties. The fourth category includes corporate profit earned by the business corporations and the fifty categories contain net interest earned by individuals from sources other than the organs of the government.
    Census of income method broadly is comprised of (a) Compensation of employees (b) Interest (c) Rent (d) Profits and dividends (e) mixed income of self employed. The difference between export and import are also included in the national income. An aggregate of the above five categories of incomes will not be equal to the G.N.P. The reason is that a part of the total expenditure incurred by the community does not become available to the factors of production in the form of incomes. Firstly there expenditure leaks in form of indirect tax levied by the Govt, on goods and services and secondly depreciation of machinery etc. The expenditure spent on goods and services includes the indirect taxes vied by the govt. This indirect tax goes to the Govt, and hence ever comes back to the factor income.
    According to the income method the following elements are to be included or deducted from the national income. (1) Transfer payments must not be counted. Transfer payments like unemployment relief, sickness benefit old age pensions and unemployment relief should not be included. Payment for the self- owned factors used in the production processes is to be excluded; undistributed profit set aside by the business enterprise should be eluded in national income.

    3. Expenditure Method: –
    Expenditure method measures national income as the aggregate of all the final expenditure in an economy during a year. Under this method the final expenditure of the entire economy is calculated. This method is otherwise known income disposal method or consumption and investment method, al expenditure means expenditure on final goods. The total come generated in the economy is spent either on consumption goods or on investment goods.
    The total final expenditure or national expenditure (Y) represents the sum total of final expenditure incurred on consumption goods (C) and investment goods (I) symbolically Y = C+l. Final consumption expenditure includes (a) private house hold consumption expenditure, (b) Govt, final consumption expenditure, Final investment expenditure includes (a) gross final investment or gross fixed capital formation, (b) Changes stock or inventory investment (c) net export of goods and services net foreign investment.

    National Income = C + 1 + G + (x-1)

    National Income = Private consumption expenditure + Private investment + Govt. Expenditure + Net export.

  72. Avatar Chukwu Emmanuel Chimezie says:

    CHUKWU EMMANUEL CHIMEZIE
    2020/241925
    Economics department

    The methods of measuring National income are as follows:
    1. Expenditure approach
    2. Factor Income Approach
    3. Value Added or output approach

    1. The Expenditure approach: The expenditure approach measures GDP by adding together the expenditure of the four Economic units on goods and services. These are consumption expenditure (C) by households, investment expenditure (I) by firms, government purchases of goods and services (G), net exports of goods and services (NX).
    2. The Factor Income Approach: this approach measures GDP by adding together all the incomes paid by firms to households for the services of the factors of production they hire – wages and salaries for labour, interest for capital, rent for land and profit for the owners of the firm.
    Wages and salaries: This is the total payments by firms for labour services. It includes the net wages and salaries (called take home pay) that workers receive every month plus taxes withheld on earnings, plus all fringe benefits such as unemployment insurance and pension fund contributions.
    Interest for Capital: This includes the total interest income received by households on loans made by them minus interest payments made by households on their own borrowing. In other words, interest is net item in the sense that households interest payments are netted out from their interest income receipts.
    Rent: Is the income received by households from firms for the use of land and other rented inputs like housing. It includes imputed rent for owner occupied houses.
    Profits: These are profits made by the firms. It is usually called corporate profits. Some of the profits are paid out to the owner of the firm in the form of dividends and some are retained by the firms as undistributed profits.
    The addition of these factor income does not give GDP. The total rather gives net domestic income at factor cost. Net domestic income at factor cost is the sum of all factor incomes.
    3. The Value Added or Output Approach: GDP can be defined as the sum of the value Added in the economy during a given period. The term value added means exactly what it suggests. The Value added by a firm in production process is defined as the value of it’s production minus the value of the inputs (intermediate goods) bought from their firms.

  73. Avatar Umeike ikenna Emmanuel says:

    The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method.
    1. product methodIn this method, national income is measuIuured 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 process
    2. Income Method: 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.
    3. Expenditure Method: In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).
    Department of pure and industrial chemistry 2020/241132

  74. Avatar Emmanuel chiagozie Peter reg: 2020/248942 says:

    Three Important Methods for Measuring National IncomeThere are three techniques to compute national income:
    1Income Method
    2.Product/ Value Added Method
    3.Expenditure Method
    Income Method
    1.National income is calculated using this method as a flow of factor incomes. Labor, capital, land, and entrepreneurship are the four main components of production. Labour is compensated with wages and salaries, money is compensated with interest, the land is compensated with rent, and entrepreneurship is compensated with profit.Furthermore, certain self-employed individuals, such as doctors, lawyers, and accountants, use their own labour and capital. Their earnings are classified as mixed-income. NDP at factor costs is the total of all of these factor incomes.National Income is calculated as a flow of income in this case.
    2.Product/ Value Added Method
    National income is calculated using this method as a flow of goods and services. During a year, we determine the monetary value of all final goods and services generated in an economy. The term “final goods” refers to goods that are consumed immediately rather than being employed in a subsequent manufacturing process.Intermediate goods are goods that are used in the manufacturing process.
    3. Expenditure Method
    National income is calculated using this method as a flow of expenditure. The gross domestic product (GDP) is the total of all private consumption expenditures. Government consumption expenditure, gross capital formation (public and private), and net exports are all factors to consider (Export-Import).

  75. Avatar EZE JUDITH CHINONSO REG.NO :2020/242913. says:

    The following points highlight the three methods for measuring national income:.
    (1) The product (output) method
    (2) The income method
    (3) The Expenditure method
    (1) The product (output) method-the most direct method of arriving at an estimate of a country’s national output or income is add the output figures of all firms in the economy to get the total value of the nation’s output. the outputs can be grouped into certain product categories corresponding to industries or to sectors (such as the primary, secondary and tertiary sectors).

    (2) The income method- the second approach is to measure incomes generated by production.the main items of income are : Income from employment ( wages and salaries), Income of self employed persons( wages and return on capital owned by self – employed persons) Depreciation ( reduction in the value of capital goods due to their contribution to the production process) etc.

    (3) The Expenditure method- from the expenditure side national income is calculated by adding up the flows of expenditure needed to purchase the nation’s output. However, while estimating the value of national product by the expenditure method we must only record final expenditure.
    We have to exclude all the expenditure on intermediate goods and services, while measuring national income total final expenditure (T F E) is divided into four broad categories: consumption, Investment, Government expenditure ( spending), exports and imports.

  76. Avatar Kalu Favour Enyindiya says:

    Name: Kalu Favour Enyindiya
    Reg number: 2020/249472
    Department: Library and Information Science

    The national income of a country can be measured by three alternative methods; (i) Product Method (ii) Income Method, and (iii) Expenditure Method.

    1. PRODUCT METHOD: National income is measured as a flow of goods and services in this method. Money value of all final goods and services produced in an economy during a year are calculated. Final goods here refer to those goods which are directly consumed and not used in further production process. Intermediate goods are goods which are further used in production process. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods. To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.

    2. INCOME METHOD: National income is measured as a flow of factor incomes under this method. 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.

    3. EXPENDITURE METHOD: In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  77. Avatar Asogwa Chinedu Felix says:

    NAME: ASOGWA CHINEDU FELIX
    REG NO: 2019/242355
    DEPARTMENT: SCIENCE LABORATORY TECHNOLOGY

    Definition of National Income
    The total net value of all goods and services produced within a nation over a specified period of time, representing the sum of wages, profits, rents, interest, and pension payments to residents of the nation.

    Measures of National Income:
    For the purpose of measurement and analysis, national income can be viewed as an aggregate of various component flows. The most comprehensive measure of aggregate income which is widely known is Gross National Product at market prices.
    Methods of Measuring National Income
    Let’s have a look at the following ways of measuring national income −

    Product Approach:
    In product approach, national income is measured as a flow of goods and services. Value of money for all final goods and services is produced in an economy during a year. Final goods are those goods which are directly consumed and not used in further production process. In our economy product approach benefits various sectors like forestry, agriculture, mining etc to estimate gross and net value.

    Income Approach:
    In income approach, national income is measured as a flow of factor incomes. Income received by basic factors like labor, capital, land and entrepreneurship are summed up. This approach is also called as income distributed approach.

    Expenditure Approach:
    This method is known as the final product method. In this method, national income is measured as a flow of expenditure incurred by the society in a particular year. The expenditures are classified as personal consumption expenditure, net domestic investment, government expenditure on goods and services and net foreign investment.

    These three approaches to the measurement of national income yield identical results. They provide three alternative methods of measuring essentially the same magnitude.

  78. Avatar Abonyi ogochukwu malachy says:

    NAME: ABONYI OGOCHUKWU MALACHY6
    REG NO:2019/248477
    DEPARTMENT: SCIENCE LABORATORY TECHNOLOGY
    Three Methods of Measuring National Income
    There are three approaches and methods of measuring national income

    Income Method
    Product Method
    Expenditure Method
    1. Income Method of Measure National Income
    Factors of production participate in economic activity to produce goods and services, the factors are compensated for the productive services rendered to the economy. This compensation or factor income payments takes the form of wages, profits, rent and interest.

    Incomes generated by unduplicated production must equal the net value added at each stage of production. The production of bread, for Instance, has three stages i,e. entirely different from one another. First, the farmer produces the wheat and sells it to the floor mill. Second, the rifer turns it into flour and sells it to the baker. Third, the baker makes the bread and sells it to the final consumer. Mk: can either take the final price of the bread paid by the consumer and break it down into its component parts or take value added at each successive stage of production. In stage one, the value of wheat less cost, represents income to the farmer. In stage two, the value added by the millers equals the sale of flour less the cost of wheat, depreciation on equipment and other expenses. At stage three, the value added by the baker equals the sale price of bread less the value of flour etc. The value added at each stage can now be allocated to various factors of production. The incomes of the farmer, miller and baker represent: their profits, wages of their employees, rent of land and buildings, and interest on capital employed.

    Thus, the same total can be reached by either summing up the value added at each stage of production or summing up all the factor incomes generated in the process of production.

    2. Product Method of Measure National Income
    The second approach to estimate national income consists of measuring the output of all producers and to deduct from this total the intermediate purchases. An unduplicated figure of this kind can be obtained separately for each producer. This represents the value of the intermediate products with which he starts and hence his contribution to the total value of production.

    The sum of all final products measured at factor costs, net of ‘depreciation on fixed capital assets and corrected for income payments to and from abroad, would equal national income.

    3. Expenditure Method of Measuring National Income
    National income can also be measured as sum of expenditure on final goods and services less depreciation of capital assets. This involves drawing a distinction between final and intermediate purchases and transaction. In the above example, bread was a final product and its purchase by the consumer is a final transaction and hence a part of the final expenditure. The transaction between the farmer, miller and baker are intermediate transactions. As a broad rule, all purchases charged to current expense by business are treated as intermediate goods added to stock within the accounting period represent an addition to capital and though. They may not leave the business premises, expenditure on them will be a part of the final expenditure.          

    In other words, national expenditure in a closed economy is the sum of nation’s consumption and its investment. However, in an open economy having foreign trade, adjustments will have to be made for imports and exports. National expenditure is recorded at market prices. To derive estimates at factor costs, an adjustment has to be made for indirect taxes net of subsidies, if any.

    Above, we have discussed the various methods of estimating of national income, whatever method may be used for the estimation of national income, double counting must be avoided.

  79. Avatar Ikwu chidera Shadrach Reg no:2020/249699 says:

    The national income of a country can be measured by three alternative methods:
    (i) Product Method
    (ii) Income Method
    (iii) Expenditure Method.
    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 process. Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.

    2. INCOME METHOD
    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.

    3. EXPENDITURE METHOD
    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  80. University of Nigeria Nsukka
    Faculty of Physical Sciences
    Department of Pure and Industrial Chemistry
    Lambert Favour Chidiebere
    Reg no; 2020/243947

    Eco. 102 online discussion class:
    Question:
    List and Deeply Explain the various methods of measuring the National Income

    Answer;
    The national income of a country can be measured by three alternative methods:
    (i) Product Method
    (ii) Income Method, and
    (iii) Expenditure Method.

    1. 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 process.
    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.
    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.
    The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.

    2. Income Method:
    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.
    ADVERTISEMENTS:
    3. Expenditure Method:
    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  81. Avatar Onah Lotanna says:

    Name} Onah Lotanna
    Reg No. 2020/242607
    The Product (Output) Method:

    The most direct method of arriving at an estimate of a country’s national output or income is to add the output figures of all firms in the economy to get the total value of the nation’s output. The outputs can be grouped into certain product categories corresponding to industries or to sectors (such as the primary sector, secondary sector and the tertiary sector).

    The Income Method:

    The second approach is to measure incomes generated by production. The main items of income are shown in Table 1.

    Income from employment (item no. 1 in the Table) is wages and salaries. Income of self-employed persons (item number 2) includes both wages and return on capital owned by self-employed persons (who are treated as firms in microeconomics). Item number 3 is to be interpreted in a broad sense. It includes not only the rent of land but also the rent of buildings, plus royalties earned from patents and copyrights. Thus, it is a partly of return to land and partly a return to capital. Item number 4 is the major part of return on capital to the private sector.

    Likewise, item number 5 is the major part of the return to capital for the public sector. Item number 6 is depreciation which is the reduction in the value of capital goods due to their contribution to the production process. Depreciation or capital consumption allowance represents that part of the value of output which is not earned by any factor but is the value of capital used up in the process of production. This depreciation is to be treated as part of the gross return on capital

    The Expenditure Method:

    From the expenditure side national income is calculated by adding up the flows of expenditure needed to purchase the nation’s output. However, while estimating the value of national product by the expenditure method we must only record final expenditures.

    We have to exclude all the expen­diture on intermediate goods and services. While measuring national in­come total final expenditure (TFE) is divided into four broad categories: consumption, investment, government expenditure (spending), exports and imports. These four components may now be further developed.

  82. Avatar ACHOR OLUOMACHI FAVOUR says:

    NAME: ACHOR OLUOMACHI FAVOUR
    REG NO: 2020/242506

    ANSWERS
    VARIOUS METHODS OF MEASURING THE NATIONAL INCOME.
    1) Income Method
    2) Value Added/Product Method
    3) Expenditure Method

    • Avatar ACHOR OLUOMACHI FAVOUR says:

      NAME: ACHOR OLUOMACHI FAVOUR
      REG. NO: 2020/241506
      E-mail: achoroluoma@gmail.com

      VARIOUS METHODS OF MEASURING THE NATIONAL INCOME
      ANSWERS
      1) Income Method:
      2) Expenditure Method
      3) Value Added/Product Method

      1) Income Method:
      National income is calculated using this method as a flow of factor incomes. Labor, land, capital an entrepreneurship are the four main components of production. Labor is compensated with wages and salaries, land is compensated with rent, capital is compensated with interest and entrepreneurship is compensated with profit.
      National income is calculated as follows:. Employee compensation+ operating surplus (W+R+P+I)+ net income+ net factor from overseas= Net National Income.
      Where W stands for wages and salaries, R stands for Rental income, P stands for Profit and I stands for Income.

      2) Value Added/Product Method:
      National Income is calculated using this method as a flow of goods and services.
      Intermediate goods are goods that are used in the manufacturing process. Final goods are goods that are consumed immediately. The value of intermediate goods are not counted because it’s already added to the value of final goods.
      National Income is calculated as:. G. N. P- cost of capital- depreciation- indirect taxes = National Income.

  83. Avatar Lambert Favour Chidiebere says:

    Answer;
    The national income of a country can be measured by three alternative methods:
    (i) Product Method
    (ii) Income Method, and
    (iii) Expenditure Method.

    1. 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 process.
    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.
    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.
    The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.
    2. Income Method:
    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.

    3. Expenditure Method:
    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

    Thank you
    © Yourarticlelibrary.com

  84. Avatar Umeike ikenna Emmanuel says:

    The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method.
    1. product methodIn 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 process
    2. Income Method: 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.
    3. Expenditure Method: In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).
    Department of pure and industrial chemistry 2020/241132

  85. Avatar Ezugwu Kelechi Esther says:

    The methods of measuring the National Income are as follows;
    1. Product method
    2. Income method
    3. Expenditure method

    PRODUCT METHOD: In this method, only the value added by each firm in the product process in the outlet figure is included. Hence the value added method is used. This value-added output of all the sectors of the economy is this GNP at factor cost. This method is unscientific because it adds only the value of those goods and services that are sold in the market or are available for sale in the market, without further production process.
    INCOME METHOD: Under this method, National Income is measured as a flow of factor incomes. The factors of production we have are land, labour, capital and entrepreneurship, labour gets wages and salaries, land gets rent, capital gets interest and entrepreneurship gets profit as their enumeration. Some self employed person’s employ their own labour and capital such as CAs, advocates, doctors, etc. There income is called mixed income. The sum-total of all these factor income is called NPD at factor cost.
    EXPENDITURE METHOD: IN this method, National Income is measured as a flow of expenditure. It consists of two elements; consumption expenditure and investment expenditure. Consumption expenditure includes expenditure of the household sector on goods and services and consumption of outlays of the business sector and public authorities. Investment expenditure refers to the expenditure on the making of fixed capitals such as plant and machinery, building etc.

    Name: Ezugwu Kelechi Esther
    Reg No: 2020/242047
    Email: ezugwukelechi20@gmail.com

  86. Avatar Obuo Grace Ohiuma....Reg no: 2020/241933 says:

    The various methods of measuring national income are:
    1) Product method: In this method,national income is measured as a flow of goods and services. Money value of all final goods and services produced in an economy during a year are calculated. The final goods refer to those goods and services which are not directly consumed and are not used in further production process.
    2) Income method: national income is measured as a flow of factor incomes. These factors include labour,land, capital and entrepreneurship.
    Which have different profits as their renumeration.
    3) Expenditure method: National income is measured as a flow of expenditure where GDP is sum-total of private consumption expenditure, Government formation and net exports.

  87. Avatar Nwafor Ifeanyi Stanley says:

    3 Important Methods for Measuring National Income

    Article shared by : Nwafor Ifeanyi Stanley
    2020 /245276

    The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method.

    1. 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 process.

    National income
    Image Courtesy : peteranthony.org/wordpress/mall.jpg

    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.

    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.
    The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.

    2. Income Method:

    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.

    3. Expenditure Method:

    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

    2020 /245276

  88. Avatar Nweke chinyere gift says:

    2020/248387
    1) Income method:This is obtained by adding
    incomes received by all the factors of production .The income to be added includes workers earnings (wages and salary),profit from entrepreneurs,rents on land,interest on capital etc The income which must be included must be that arises from the factors of production.
    2). output method:This method measures the total money value of all goods and services produced in the country in a year .In other to avoid double counting, the figures are collected on the basis of value added.value added is defined as the value of output,less cost of input .in this method, national income is measured by adding together the value of enterprises which include individuals,firms and the government.output method is also called the bnet product or added value method.
    3) Expenditure method:This method calculates the total amount spent on consumption and investment purposes during the year .it measures the total expenditure on currently produced final goods and services by individuals or firms and government plus net export.Transfer payments such as payment paid to retired workers,gifts to beggars etc.are excluded.
    Formula for calculating national income using expenditure method is as follows:
    National income =C+I+G+X_M=subsidies _tax-depreciation.
    Where C is consumption.
    I is investment
    G is government expenditure
    X is export and
    M is imports

  89. Avatar Oluka Confidence Ebubechukwu....Reg no: 2020/243919 says:

    The various methods of measuring the national income include:
    1) Product method: In this method, national income is measured as a flow of goods and services. Money value of all final goods and services produced in an economy during a year are calculated. Final goods here refer to those goods which are not directly consumed and are not used in further production process.
    2) Income method: Under this method, national income is measured as a flow of factor incomes. There are four factors of production: labour,land,capital and entrepreneurship.Labour gets wages and salaries,capital gets interest,land gets rent and entrepreneurship gets profit as their renumeration.
    3) Expenditure method: In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure,Government formation and net exports

  90. Avatar MBIBE MARTHA QUEEN says:

    Name: Mbibe Martha Queen.
    Department: Combined Social Science.
    Reg No: 2020/242938.
    Course code: Eco 102( Introduction to Principles of Economics ll).
    QUESTION
    Methods of Measuring National Income.
    National Income means the value of goods and services produced by a country during a financial year. Thus, it is the net result of all economic activities of any country during a period of one year and is valued in terms of money.
    There are three basic methods to measure National Income which includes:
    • Production or Value Added.
    • Income or Factor Earning Method.
    • Expenditure Method.

    1. PRODUCTION ( OUTPUT) or VALUE ADDED METHOD.
    This method measures domestic income by estimating the contribution of each producing Enterprise to production in the domestic territory of the country during an accounting year.
    Under the production method, the national income is calculated by adding up the money value of goods and services produced by the primary, secondary and tertiary sectors. It is useful for assessing the contribution of each of these sectors towards the national income.
    According to Lipsey, ” A firm’s output is defined as it’s value added; the sum of all values added must be the value, at factor cost, of all goods and services produced by the economy. It is a way of computing the national income of a country.
    The broadcast and most widely used measure of National Income is Gross Domestic product (GDP), the value of Expenditure of final goods and services at market prices produced by domestic factors of production ( Labour, capital, materials) during the year.
    In this method, national income is measured as a flow of goods and services. We calculate the money value of all final goods and services produced in an economy during the year. Final goods here refer to those goods which are directly consumed and not used in further production process.

    2. INCOME OR FACTOR EARNING METHOD.
    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 renumeration.
    The income method measures the national income from the side of payments made to the primary factors of production in the form of rent, wages, interest and profit for their Production services in an accounting year.
    The income approach is an evaluation methodology used for real estate estimation, which is computed by dividing the capitalisation tariff or price by the net operating income of the rental payment. Investors use this computation to value properties based on their profitability.

    3. EXPENDITURE METHOD.
    In this method, national income is measured as a flow of Expenditure. GDP is the sum total of private consumption expenditure, Government consumption expenditure, gross capital formation. ( Government and Private) and net exports ( Exports- Import).
    The Expenditure method is a system for calculating gross domestic product ( GDP) that combines consumption, investment, government, spending and net exports. It is the most common way to estimate GDP.
    The Expenditure method is a technique for measuring a country’s gross domestic product GDP by incorporating import, exports investment and consumption.

  91. Avatar Chigbo Juliet Chinwendu says:

    1. The product method: All goods and services produced during the year in various industries are added up. This is also known as value-added to GDP or GDP at the sector of origin’s cost factor. It is in other words, the amount of the added gross value
    2. The income method: In a nation that produces GDP during a year, people earn income from their jobs. Thus the sum of all factor incomes in GDP by revenue method, wages and salaries (employee compensation)+ rent+ interest benefit
    3. Expenditure method: This approach focuses on products or services generated during one year within the region. GDP is subtracted from the position of consumption, investment and government spending expended on imports. Likewise all manufactured components, such as raw materials used in the manufactured of products for sale are also exempt. Thus GDP by expenditure method at market prices is net export which can be positive or negative.
    Chigbo Juliet Chinwendu
    juliet.chigbo.243912@unn.edu.ng
    Pure and industrial chemistry

  92. Avatar Peter Ndukwo Eleanya says:

    Name: Peter Ndukwo Eleanya
    Reg No: 2020/244925
    Department: Pure and industrial chemistry.
    .
    Methods of measuring National income..

    1. 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 process. Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods. To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP. The money value is calculated at market prices so sum-total is the GDP at market prices.

    2. Income Method: 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.

    3. Expenditure Method: In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  93. Avatar Opogu victory says:

    Name – Opogu victory chinagorom
    Reg No – 2020/241863
    Faculty – physical science
    Department – pure and industrial chemistry
    Eco 102 Assignment – list and deeply explain the methods of measuring the national income …..
    They are;
    1.The product method (output)
    2. The income method
    3. Expenditure method
    1. The product method ;its the most direct method of arriving at an estimate of a country’s national income or output, in this the output figures of all firms in the economy is added to get the total value of the nations output, which can be grouped into certain product categories corresponding to industries or sector such as( primary, secondary and tertiary) in this method the problem of multiple counting or double counting is normally encountered ; so the concept of “value added” was introduced which is the difference between output value and input value at each stage of production. In short words product method measure national output called the gross domestic products(GDP) in terms of value added by each of the sector in the economy.
    2.The income method ; this measures the income generated by production. It can be divided into various categories ; (a) The stock appreciation ( the valuation of stocks or goods produced but not sold the same year).
    ( b) depreciation or capital consumption allowance ; it represents that part of value output which is not earned by any factor of the economy but is the value of capital used up in the process of production .
    (c) Transferred income : incomes that are not payment for a services rendered such as unemployment benefit, widows benefit etc.
    (d) disposable income factor ; income usually recorded as gross ( ie before taxes are paid ) because it is the measure of the factor contributions to output.
    (e) Net factor ( property) ie income from abroad.
    (f) stock adjustment and capital gains and losses.
    3. The expenditure method : in this side the national income is calculated by adding up the flows of expenses needed to purchase the nations output, while estimating the value of national product by expenditure method we must only record final expenditure excluding the expenditure on intermediate goods and services, The total final expenditure is( TFE) is divided into four broad categories. (a) consumption expenditure ( purchases by house hold ,of currently produced goods and services)..
    (b) investment ; expenditure on currently produced capital goods eg plants ,equipment ,stocks etc
    (c) Government expenditure ; the spendings made by the government .
    (d) Export and import ; export (expenses on domestic output) import ( consumer expenditure on foreign goods ).

  94. Avatar Nwinya Nathaniel Toochukwu says:

    The methods of measuring national income includes; product, income and expenditure methods.
    1. Product method: in this method, national income is measured as a flow of goods and services. The money value of final goods and services are calculated at their market price, which is refered to as the GDP at market price.
    2. Income method: this method deals the measure of flow of factors income. The renumeration for the factors of production (rent for land, wages and salary for labour, interest for capital and profit for entrepreneurship), sum up to the NDP at factors costs.
    3. Expenditure method: as it’s name suggests, this method measures the flow of expenditure.

  95. Avatar Anigbo Esther Chisom says:

    Name: Anigbo Esther Chisom
    Reg no: 2020/243974
    Dept: pure and industrial chemistry
    1. The Product Method:
    In this method, all goods and services produced during the year in various industries are added up. This is also known as value-added to GDP or GDP at the sector of origin’s cost factor. India includes the following items: agriculture and allied services; mining; development, construction, the supply of electricity, gas, and water, transport, communication, and trade; banking and insurance; real estate and property ownership of residential and commercial services and public administration and defence and other services (or government services). It is, in other words, the amount of the added gross value.
    2.The Income Method:
    In a nation that produces GDP during a year, people earn income from their jobs. Thus the sum of all factor incomes is GDP by revenue method: wages and salaries (employee compensation) + rent + interest + benefit.
    3.Expenditure Method:
    This approach focuses on products and services generated during one year within the region.
    GDP is subtracted from the portion of consumption, investment, and government spending expended on imports. Likewise, all manufactured components, such as raw materials used in the manufacture of products for sale, are also exempt.
    Thus GDP by expenditure method at market prices is net export, which can be positive or negative.

  96. Avatar Anike Peter Madueke says:

    VARIOUS METHOD OF MEASURING NATIONAL INCOME:
    a. Productive method
    b. Income method
    c. Expenditure method
    PRODUCT METHOD: In product method,national income is measured as a movement of goods and services. We calculate money value of all final goods and services produced in an economy per annum. Final goods here are consumer goods and not the ones used in further productions.

    INCOME METHOD: In this method, national income is measured as a flow of factor incomes. There are generally four factors of production entrepreneurship, capital, land and labour. Labour gets wages and salaries, capital gets interest, land gets rent and entrepreneurship gets profit as their remuneration.

    EXPENDITURE METHOD: In this method, national income is measured as a flow of expenditure. GDP( gross dosmetic product) is sum-total of internal consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports .

    Name: Anike peter madueke
    Reg. Number : 2020/249532
    email: maduekeankh@gmail.com

  97. Avatar Onwuzurike Oluchi Loveline says:

    Name: Onwuzurike Oluchi Loveline
    Department: Pure and industrial chemistry
    Reg no: 2020/245302

    National income of a country can be measured by three alternative methods namely:
    1)Product method
    2)Income method and
    3)Expenditure method

    1) 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 refers to those goods which are directly consumed and not used in further production process. Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income, otherwise there will be problem of double counting of value of goods. To avoid the problem of double counting we can use the value addition method in which not the whole value of a commodity but value addition ( ie value of final goods, value of intermediate goods) at each stage of production is calculated and these are summed up to arrive at GDP.

    2) Income method: Under this method, national income is measured as a flow of factor income. There are generally four factors of production, labour, capital, land and entrepreneurship. Labour gets wages and salaries, capital gets interest, land get 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 income is called National Domestic Product (NDP) at factor costs.

    3). Expenditure method: In this method, national income is measured as a flow of expenditure from government consumption, net exports and gross capital formation.
    The formula is:
    National income = C+G+I+NX. Where
    C = household consumption
    G = government expenditures
    I = investment expenditure and
    NX = net exports.

  98. Avatar CHUKWUMA FLOURISH EBUBECHUKWU. 2020/248968. Pure and industrial chemistry says:

    There are four methods of measuring national income they are:
    1. Product method
    2. Income method
    3. Expenditure method
    4. Value added method

    1. Product method:
    According to this method, the total value of final goods and services produced in a country during a year is calculated at market prices.
    To find out the GNP, the data of all productive activities, such as agricultural products, wood received from forests, minerals received from mines, commodities produced by industries, the contributions to production made by transport, communications, insurance companies, lawyers, doctors, teachers, etc. are collected and assessed at market prices.

    2. Income method
    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.

    3. Expenditure method:
    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

    4. Value added method:Another method of measuring national income is the value added by industries. The difference between the value of material outputs and inputs at each stage of production is the value added. If all such differences are added up for all industries in the economy, we arrive at the gross domestic product.

    Chukwuma Flourish
    2020/248968
    Pure and industrial chemistry

  99. Avatar Okeke Ebere Florence says:

    Name: Okeke Ebere Florence
    Reg No: 2020/243487
    Department: Pure and Industrial Chemistry
    METHODS OF NATIONAL INCOME
    1. Product(Output) method
    2. Income method
    3. Expenditure method
    EXPLANATION
    1. Product method: The product method is based on returns made by firms and public corporations concerning the annual value of their output. National income is measured by calculating the total value of goods and services produced in the country during the year.
    In India, a full census is taken every 10 years and sample censuses are taken in the intermediate years. Additional information may now be obtained from returns with respect to sales tax/or excise duty.
    The money value of goods and services produced in an economy in accounting year is called GROSS NATIONAL PRODUCT(GNP) which is defined my J. R. Hicks as “the collection of goods and services reduced to common basis by being measured in terms of money”.
    The output can be into certain categories namely; Primary sector, secondary sector and tertiary sector.
    Output product has a major problem which is problem of double counting.

    2. Income Method: The second approach is to measure income generated by production.
    MAIN ITEMS OF INCOME
    a. Income from employment which includes wages and salaries
    b. Income of self- employed persons which includes both wages and return on capital owned by self employed persons(who are treated as forms by microeconomics)
    c. Rents of land, buildings plus royalties earned from patents and copyrights
    d. Return on capital to the private sector
    e. Return to capital to the public sector etc

    3. Expenditure Method: From the expenditure side, national income is calculated by adding up the flows of expenditure needed to purchase the nation’s output. However, while estimating the value of national product by expenditure method, we must only record final expenditures and exclude all the expenditure on intermediate goods and services.
    While measuring national income, TOTAL FINAL EXPENDITURE (TFE) is divided into four broad categories; consumption, investment, government expenditure ( spending), exports and imports.
    VARIOUS MEASUREMENT PROBLEMS CROP UP IN PRACTICE OF EXPENDITURE METHOD
    a. Price level changes
    b. Public goods
    c. Self- supplied goods and services
    d. Underground Economy
    e. Double counting
    f. Factor cost etc

  100. Avatar OKOH MATHEW CHIBUIKE says:

    There are different methods of measuring national income which includes the following: 1) product method : in this method, the total value of final goods include services that are produced within the country in a year is calculated at the market price. To get the
    Gnp, it normally capture all the productive activities in the country such as agricultural produces, mineral mines,commodities produce by the industries, assurance companies, lawhere etc. The data of the following will be and assessed at market price. At this point, it is only the final goods and services are included. 2) Expenditure method : In this method, the total expenditure made by the society in a particular year is added together, it also includes personal consumption expenditure, government expenditure on goods and services and net foreign investment. This method is rationally based on the assumption that national income equals national expenditure.
    3) Income method : Here, the net income payment that are received by all citizens of the country in a particular year are added up. That is the payment made to all factors of production in the form of net wages, net rent, net interest and net profit are all added up together but the ones made in form of transfer are not included in the sum.

  101. Avatar Attah Blessing Oluomachi says:

    Attah Blessing Oluomachi
    2020/243514
    oluomachi.attah.243514@unn.edu.ng
    Pure and Industrial chemistry

    1. Product method
    2. Income method
    3. Expenditure method

    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 process.
    In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.
    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.
    The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.

    Income Method
    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.

    Expenditure Method
    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  102. Avatar ODO ABIGAIL OLUCHI. 2019/249345 says:

    Expenditure Method:This approach focuses on products and services generated during one year within the region.GDP is subtracted from the portion of consumption, investment, and government spending expended on imports. Likewise, all manufactured components, such as raw materials used in the manufacture of products for sale, are also exempt.Thus GDP by expenditure method at market prices is net export, which can be positive or negative.

  103. Avatar ODO ABIGAIL OLUCHI. 2019/249345 says:

    THE PRODUCT METHOD:
    In this method, all goods and services produced during the year in various industries are added up. This is also known as value-added to GDP or GDP at the sector of origin’s cost factor. India includes the following items: agriculture and allied services; mining; development, construction, the supply of electricity, gas, and water, transport, communication, and trade; banking and insurance; real estate and property ownership of residential and commercial services and public administration and defence and other services (or government services). It is, in other words, the amount of the added gross
    . THE INCOME METHOD:
    :In a nation that produces GDP during a year, people earn income from their jobs. Thus the sum of all factor incomes is GDP by revenue method: wages and salaries (employee compensation) + rent + interest + benefit.
    EXPENDITURE METHOD:
    This approach focuses on products and services generated during one year within the region.GDP is subtracted from the portion of consumption, investment, and government spending expended on imports. Likewise, all manufactured components, such as raw materials used in the manufacture of products for sale, are also exempt.Thus GDP by expenditure method at market prices is net export, which can be positive or negative.

  104. Avatar Onyekaigwe chiadikaobi Queendaline says:

    The various method of measuring national income are as follows
    1. Gross Domestic Product (GDP): This is the total value of goods and services produced within the country during a year.This is calculated at market price and is know as GDP at market price.
    GDP has many ways of measuring: product method, income method and Expenditure method
    2. GDP at factor cost: This is the sum of me value added by all producers within the country. GDP is the sum of domestic factor income and fixed capital consumption.
    3. Net domestic product (NDP): This is the value of net output of the economy during the year.some of the country’s capital equipment wears out or becomes obsolete each year during the production process.
    4. Nominal and real GDP: when GDP is measured on the basis of current price,it is called GDP at current price or nominal GDP. On the other hand, when GDP is calculated the basis of fixed price in some years,it is called GDP at constant price or real GDP.
    5. GDP deflator: This is an index of price changes of goods and services including in GDP .it is a price index which is calculated by dividing the nominal GDP in a given year by the Real GDP for the same year and multiplying it by 100.

  105. Avatar Nnadi Jenevine Ifebuche says:

    Nnadi Jenevine Ifebuche
    2020/249840

    There are three methods for measuring the national income:
    1.Product method
    2.Income method
    3.Expenditure method
    (i) Product method:Here income is measured as a flow of goods and services.The money for all final goods and services produced in an economy is calculated during a year.
    (ii) Income Method: Here income is measured as a flow of factor income. The four factors of production:labour, capital,land and entrepreneurship get their reward thus:
    Labour-wages
    Capital-interest
    Land-rent
    Entrepreneurship-profit
    While those who employ their own labour and capital eg Doctors their income is called mixed income. Sum total of all those factors income is called NDP(net domestic product)at factor costs.
    (iii) Expenditure method: Income here is measured as a flow of expenditure.GDP(gross domestic product) is sum total of private consumption expenditure.

  106. Avatar Okonkwo blessing chioma 2020/245096 pure and industrial chemistry says:

    There are three methods of measuring national income which are
    1) product method
    2) Income method
    3) Expenditure method
    1) product method: it is also known as the output method. This is the most direct method of arriving at an estimate of a country’s national output or income is to add the output figures of all firms in the economy to get the total value of the nation’s output. The outputs can be grouped into certain product categories corresponding to industries or to sectors .When we use the product method one major problem arises. This is known as the problem of double counting. It arises due to the fact that the industry’s output is often the input of another industry. This is why when we add up the values of all sales, the same output is counted again and again as it is sold by one firm to another. This problem is avoided by using the concept of ‘value added’, which is the difference between output value and input at each stage of production.
    2) Income method: In 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.
    3) Expenditure method: This method measures the total domestic expenditure of the economy. It consists of two elements, which are a)Consumption expenditure and
    b)Investment expenditure.
    Consumption expenditure includes consumption expenditure of the household sector on goods and services and consumption outlays of the business sector and public authorities.
    Investment expenditure refers to the expenditure on the making of fixed capital such as Plant and Machinery, buildings, etc.

    Okonkwo blessing chioma
    Pure and industrial chemistry
    2020/245096

  107. Avatar Anolue Ugochi Sylvia says:

    Your Article Library
    3 Important Methods for Measuring National Income

    The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method.

    1. 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 process.

    National income

    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.

    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.

    The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.

    2. Income Method:

    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.

    3. Expenditure Method:

    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

    Name—Anolue Ugochi Sylvia
    Reg no- 2020/244142
    Department- pure and industrial chemistry

  108. Avatar Onyenaobiya Chigozie Henry says:

    METHODS OF MEASURING NATIONAL INCOME INCLUDE
    1. The product method
    2. Value added method
    3. Income method
    4. Expenditure method

    1. THE 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 process.

    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.

    2. VALUE ADDED METHOD: To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.
    The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.

    3. INCOME METHOD: 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.

    4. EXPENDITURE METHOD: In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.

    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at Gdp.

    Onyenaobiya Chigozie Henry
    2020/243531
    Pure and industrial chemistry

  109. Avatar Obiakor ogechukwu Stephanie says:

    1. The product (output) method
    2. The income method
    3. The expenditure method

    1 Product method: under this method, we add the values of output produced or services rendered by the different sectors of the economy during the year inorder to calculate national income.
    In this method,we include only the value added by each firm in the production process in the output figure. Hence we use value added method.The value added output of all the sectors of the economy is the GNP at facter cost.
    However, this method is unscientific as it adds the value of only those goods and services that are sold in the market.

    2. Income method: under this method, we add all the incomes from employment and ownership of assets before taxation received from all the production activities in an economy. Thus,it is also the factor income method .we also need to add the undistributed profits of the private sector and the trading surplus of the public sector cooperations.
    However we need to exclude items not arising from productive activities such as sickness benefits, interest on national debt etc

    3. Expenditure method: This method measures the total domestic expenditure of the economy, it consists of two elements, i.e consumption and investment expenditure.
    Consumption expenditure include consumption expenditure of the house hold sector on goods and services and consumption outlay of the business sector and public authorities.
    Investment expenditure refers to the expenditure on the making of fixed capital such as plant and machinery buildings etc.

  110. Avatar Name: Ogbodo Dikanna Francis Reg no 2020/245751 CSS Eco/Geo says:

    National income is measured by the output method by calculating the total value of goods and services produced in the country during the year. The money value of goods and services produced in an economy in an accounting year is called Gross National Product (GNP). It is defined by J. R. Hicks as “the collection of goods and services reduced to a common basis by being measured in terms of money.” This item takes account of the fact that stocks of goods will increase in value from one year to the next simply because of price rise. For example, if there was a stock of 100 cars in a factory last year and the same number of the same type of cars this year, the value of the stock will be greater this year, because the price of the cars has risen—yet there has been no increase in the number of cars involved.

    A deduction, therefore, needs to be made to remove the influence of price changes on stocks. In other words, stock appreciation must be subtracted from the estimates of stock changes. (As stock appreciation affects the calculation of profits, a similar deduction has to be made when using the income method).

    (iv) International Transactions:

    The value of goods and services produced within the country includes their import content. Imports yields incomes to owners of resources in other countries. They are part of the domestic products of other countries. Hence, they must be deducted from the GNP. Exports yield income to the domestic factors. So they are included in the domestic product. Their import is dealt with in the general deduction of imports. Cry

    In most countries GNP or GDP is measured at current (market) prices. Table 17.1 shows the national income of a hypothetical economy in an accounting year.

    Table 17.1: The National Product of a Hypothetical Economy 1998-99:

    The National Product of a Hypothetical Economy

    Thus, we see that all types of activities are covered—the primary sector, e.g., agriculture, forestry and fishing; secondary sector, e.g., manufacturing and construction; and tertiary sector, e.g., distribution, transport, banking and insurance. The national product is the total value of everything produced in the country. It is a measure of the goods and services becoming available to the nation for consumption or adding to wealth.

    Problems:

    When we use the output method certain problems arise:

    (i) Unpaid Service: The GNP figure includes only productive activity for which payment is received. Any unpaid service (s) will not be included. For example, housewives do a lot of work such as cooking, nursing, drawing of water, coaching children and so on. But they are not paid specifically for this. Any housekeeping allowance given to the wife by her husband is regarded as a transfer within the family. If, however, another person were employed and paid to undertake the cleaning of house, the payment to him (her) would be included in the figures, because she is providing a service for which she is being paid.

    Thus, any service which people undertake for themselves will be excluded from the figures. This indicates one area for caution in comparing national income figures for different countries. In less developed countries like India, people do more things for themselves — grow their own food, make their own clothes, etc. They do not pay for all the commodities and services they need. The national income of such a country will be that much less because most people provide so many unpaid (free) services for themselves.

    (ii) Double Counting:

    Another problem is drawing up the production figures is the need to avoid double-counting, i.e., including the same item twice. For example, the value of the output of the steel industry is calculated, but some of the steel has gone to the car industry to be used in the production of cars. So if we simply calculate the value of the output of the car industry and add it to the figure for the steel industry, then some of the steel has been included twice in the calculations — once as steel and once as part of the cars.

    In order to avoid this problem of double counting, it is only the value added by each industry which is included, i.e., the value of the industry’s output minus the value of the materials, etc. bought from other industries. Thus, we need figures of only the final selling values of goods and services.

    (iii) Stock Appreciation:

    Another problem arises due to stock appreciation. Some final goods will be added to stocks and not incorporated in other goods in the current year. On the other hand, the value of current output will include the using up of stocks inherited from the past. These problems are dealt with by including net additions to stocks, which may be positive or negative, in the domestic product.

    Net addition to stock must refer to additions to the physical stock of assets and not just the money value (price x quantity) of stocks. The latter can rise because the normal accounting of firms writes up the value of stocks as price rise. Such a rise in the book value of stocks is recorded as stock appreciation. So we arrive at the following estimate:

    GNP – Imports = Gross Domestic Product.

    The domestic product is the value of every­thing produced in a particular territory. It differs from the national product by the amount of any factor incomes paid to (or by) non­residents. This interest paid to foreigners who have provided capital in a country is included in the domestic product since it is part of the value of what has been produced in the country. But it is excluded from the national product since the income does not accrue to residents in the country.

    Method # 2. The Income Method:

    The income method of calculating the national incomes is based on figures collected from the income tax departments. In advanced countries the majority of people have to submit returns about income for assessment. So a fairly accurate estimate of total incomes can be obtained in this way. By contrast, in a country like India, where few people make tax returns or where there is wide-scale tax evasion, the income method is not much reliable. The income method of calculating national income is to work out the total of all incomes received by people and organizations in the country. The national income includes the income earned by all the resources of the country from their participation in productive (i.e., money-earning) activities.

    Everything that is produced in an economy belongs to someone; it may be kept by the owner of the capital used in producing it, in which case it represents the interest on his capital; it may be shared out directly among those whose labour has produced it, as with fishermen, in which case it represents their wages; or it may be bought by another man with the money income which he has earned in another form of production. It, therefore, follows that the total national product must be equal to the total national income. The following table shows the different types (sources) of income in a hypothetical economy.

    Table 17.2: National Income of a Hypothetical Economy 1998-99:

    National Income of a Hypothetical Economy: 1998 -99

    The national income can thus be measured by adding up all the incomes earned by the owners of the factors of production; it includes the total of all wages and salaries earned, rents and royalties, interest received on loans, and the profits of companies, private businesses, farms, fisherman and traders. This is called national income at factor cost, because it shows the costs of production as it is paid out or imputed to the factors employed.

    One can compare this with the national product and the total will be the same. It is so because the national product is the total value of everything produced in the country and is a measure of the goods and services becoming available to the nation for consumption or adding to wealth (i.e., investment). (i) Mixed Income:

    Although this table attempts to separate the payments to different factors of production, ‘mixed’ income are derived from a mixture of factors. So, in practice, it is virtually impossible to separate the returns to land, labour and capital. An example is a wheat farmer, whose income is derived from land, capital and labour—all supplied by himself. Again, retailers (such as grocers) provide both labour and capital, but we cannot find out how much each factor has earned.

    (ii) Transfer Income:

    It is important to include in the calculations only those incomes which correspond to the production of goods and services. Otherwise there may be double- entry, i.e., the same income may be counted twice. For example, a worker in a jute mill may receive Rs. 2,000 per month, of which Rs. 302 is taxed away by the government.

    A freedom fighter receives a pension of Rs. 300 per month. The total income for both is Rs. 2,300; yet only Rs. 2,000 of this corresponds to productive activity. Therefore, the pension should not be included. The figure for total income would then be Rs. 2,000 — corres­ponding to the amount of production involved.

    There are other payments which do not correspond to the production of goods and services—unemployment compensation and other social security payments, interest on government bonds, subsidies to poor families, scholarships to students, pocket money paid by parents to children, gift by one individual to another (within the same country). Such incomes are paid to the recipients out of the earnings of producers by means of taxes, insurance contributions and gifts. These incomes differ from the incomes of the factors of production, called factor incomes. Interest on national debt is also counted as a transfer income of its recipients because it is paid out of taxes without any current goods and services being made available in return. Such payments are known as ‘transfer payments’. These are to be excluded when calculating national income.

    These are excluded from national income because such incomes do not represent payment for contributing to the production of goods and services. Thus, recipients of retirement pensions, family allowances, students’ grants and social security benefits do not make any current contribution to society’s output of goods and services.

    Taxes which transfer income from the factors of production to the relevant bene­ficiaries are called transfer payment.

    The sum-total of all incomes includes both factor incomes and transfer incomes. Since the latter are paid of the former without any goods and services being made available as a result, they exaggerate the flow of income in real terms. They are double-counted, once as factor incomes and again as transfer incomes. They must, therefore, be excluded from national income.

    (iii) Imputed Income:

    One item which often creates problem is ‘ownership of dwellings’. People who let out houses for rent are providing a service. So the rents received by them must be included in the national income figures. But account must also be taken of owner- occupied houses. No rent is actually paid here. But the houses provide the same service to the dwellers as rented accommodation. The problem is overcome by imputing a rent to such houses, i.e., the amount the owners would probably have received if they had rented the houses. iv) Government Services:

    There are many services provided by the government of a country which satisfy the collective wants of the community as opposed to the individual wants of the citizens. Thus, administration through the civil service, defence by the armed forces, protection by the police force, justice through the law courts, health care and education are provided by the state.

    Each citizen does not pay according to the amount of such services that he (or she) wants. A pacifist has to help to pay for defence; a wealthy person has to help in the provision of social health and education services which he or she may never use. This list of anomalies could be greatly extended. Is it, then, realistic to include the incomes derived from producing such services as part of the income derived from satisfying wants?

    In fact, government services of this kind are included in the national income on the ground that the community pays for them simply because it surely needs them.

    (v) Net Factor Income from Abroad:

    Some people and firms earn income by producing goods and services or owning property in other countries. Such incomes will not be included in calculations based on the earnings of factors within the country (the domestic income) and must be added to the total. On the other hand, some of the domestic income is earned by non-residents as a result, for example, of the operation of foreign firms within a country. These incomes must be deducted when computing the national income. These two adjustments can be made together by adding net income from abroad if it is positive or by deducting it if it is negative.

    Method # 3. The Expenditure Method:

    A third way of arriving at this same total is to add up the total national expenditure. We have to include private and government expenditure and the value of newly — created capital. If everything we buy were produced at home and nothing were sold abroad, then the total national expenditure would be equal to the total income and to the total national product.

    But, of course, every country trades with others to a certain extent. Thus, unless the value of everything they export is equal to the value of their imports, national expenditure will be either greater or less than the national product and income.

    Some countries export more than they import. They have an export surplus, which we may regard as a balance of unspent income. In such countries we have, therefore, to include the export surplus as an item in our total national expenditure. If there is an import surplus we have to deduct this from the total national expenditure.

    For balancing this third account with the other two, we have to make one further adjust­ment. Expenditure at market prices includes, for some goods, a payment to the government as indirect tax like sales tax or excise duty. These taxes are not really a payment for any goods or services. So we deduct them from total expenditure to arrive at a final figure which is equal to the value of the national product or national income at factor cost.

    The following table illustrates this method:
    The following table illustrates this method:

    National Expenditure of a Hypothetical Economy: 1998-99

    The table 17.3 shows that the major portion of the national product is enjoyed by the people as food, clothing, bicycles and other ‘consumer’ goods. A certain portion goes abroad as an export surplus. It is a form of savings which can later be turned into imports, thus enabling the country (under consideration), if necessary, to consume more at some future time than its current national product. Two other components of aggregate expenditure are: private investment (capital formation) and government expenditure (on currently produced goods and services).

    There are two other groups of spenders in the country whose expenditure must be included, namely, public authorities and firms. (Public authorities consist of central and local govern­ments). With regard to the second item in Table 17.3, we are concerned only with the expenditure of public authorities on goods and services.

    Expenditure on such items as pensions, student grants (i.e., loans and scholarships), unemployment benefit, etc. is not included, because such expenditure does not correspond to any production in the economy. The inclusion of such expenditure would not give a true indication of the value of the goods and services produced in the economy during the year. It is only expenditure on goods and services which is relevant here.

    The expenditure method depends on some­what less accurate statistics because of the great number of retail outlets where most of the relevant transactions take place. Information about retailing, wholesaling and the provision of some service is obtained from the Census of Distribution. Additional information is obtained from sales tax (and excise duty) returns.

    Problems:

    When all the items are added, we arrive at total domestic expenditure at market prices. But this is not equivalent to national income. What we have worked out so far is the total amount spent in this country on goods and services, not the total amount spent on goods and services produced in this country.

    When we use the expenditure method the following problems arise:

    (i) Exports and Imports:

    Some of the goods produced in this country will be sold abroad. For example, when Indian cars are sold in Bangladesh, the expenditure takes place in Bangladesh and is, therefore, not included in any of the items mentioned so far in Table 17.3.

    Yet the value of those cars will be included in the figure for total production in India. The same is true of all Indian exports. Therefore, if we are to ensure that Total Production = Total Expenditure, we must add to our previous figure the value of exports.

    With regard to imports, the reverse is true. Money is spent in the country on goods which have not been produced in this country. For example, when we import pears from Australia, the expenditure on those pears is included in our figure for ‘Total Domestic expenditure’, yet the figure for the ‘Production’ of the pears will be included in the Australian national income statistics and not in ours. Therefore, there is again a danger of losing the equality of Total Production and Total expenditure. To remove this danger we must subtract the value of imports.

    When exports and imports have been taken into account in this way, the new total is gross domestic expenditure at market prices.

    (ii) Indirect Taxes and Subsidies:

    However, we do not have an expenditure figure equivalent to the amount which producers receive for producing the goods and services during the year. For example, the amount paid by a consumer for a packet of cigarettes is not the amount received by the cigarette manufacturer. Part of the price is made up of tax and that money goes to the government, not to the cigarette manufacturers.

    In cases like this, where there are taxes on goods and services (‘indirect taxes’ as they are called), the amount of the tax must be deducted from the expenditure figures.

    The opposite argument applies to subsidies. These are amounts of money paid by the government to producers of certain goods in addition to the amounts received from the sale of the goods. For example, if there was a subsidy on milk production, the farmer would receive money from the buyers of the milk and also an extra amount from the government. To overcome this problem we must add subsidies to our expenditure figure.

    When indirect taxes have been subtracted and subsidies added the total arrived at is gross domestic expenditure at factor cost, which will be the same as gross domestic product at factor cost.

    We are now getting nearer to the final figure for national income, but there are still two more stages through which we must go before that figure is reached. The first of these is to take into account ‘Net factor income from abroad.’

    (iii) Factor Income from Abroad:

    We have covered income received from the sale of goods and services produced in this country. But some people in this country receive income as a result of their ownership of property abroad. For example, they receive interest on profits on their assets abroad.

    Similarly, there is an outflow of money to people in foreign countries who own assets in this country. For example, foreign companies like the Mitsubishi Electric Company have factories in India.

    When these flows of money are included in the figures—under the heading ‘net factor income from abroad’—the result is known as Gross National Product at factor cost.

    This shows the total of goods and services produced over the year together with income from property held abroad. But there has been a wearing out of machinery, etc. used in the production of that output.

    So, to get a true indication of the amount that production has added to the country’s wealth, one should set aside a certain amount of the year’s output to cover this wearing out of capital. Hence, the final item in the calculation — capital consumption (or depreciation). When this amount is deducted, the result is Net National Product at factor cost, or, in other words, National Income.

    These, then, are the various stages involved in calculating the National Income. It can be seen that at each stage one word or group of words is altered and when all the necessary alterations have been made, the National Income is found.

    There are four main changes to remember and these are listed below:

    Four Main Changes of National Income

    A Problem Common to all Methods:

    The national income, product and expenditure can all appear inflated if no account is taken of the wearing out and using up of capital. The object of the computations is to measure the economic results of current activity. The production of any commodity involves the use of both labour and capital.

    During the production process the capital depreciates, i.e., it is subject to wear and tear. This depreciation represents the contribution to production and income of assets inherited from previous periods and must be deducted from the totals if a realistic measure of the results of current activity is to be reached.

    Gross national product minus depreciation = net national product

    Gross national expenditure minus depreciation = net national expenditure

    Gross national income minus depreciation = national income.

    Depreciation is sometimes referred to as capital consumption, for obvious reasons. The maintaining of the capital of a country intact is of fundamental importance for ensuring a continued ability to achieve the prevailing standard of living. For measurements of capital consumption to be valid for this purpose it is necessary for them to be based on the current prices of the assets.

    This is to say that depreciation must be calculated on the basis of the replacement costs, not the historical costs of relevant assets. If historical costs are used in a time of rising prices the figures for depreciation will underrate the using up of capital and thus project a falsely inflated picture of the results of current economic activity.

    Another type of unmeasured production is work performed for cash and not reported as income to the government. Small jobs such as hair dressing and garbage removal are included in this category, as well as major productive activities of plumbers, painters and house­keepers.

    Also, services are sometimes swapped, so that production is exchanged for production rather than cash. For example, a dentist might maintain the teeth of a lawyer in return for legal advice. Still another type of unmeasured production involves illegal goods or services, such as recreational drugs, and much under­world activities.

    In recent years, the term underground economy has been used to refer to productive activities that are not reported for tax purposes and are not included in GDP. Although there is concern that these goods and services are not included in GDP, the primary concerns about the underground economy are lost tax revenue and the social harm resulting from some of these activities.

    Several other important factors are related to the calculation of GDP: It fails to measure the impact of production and consumption on the environment; it does not account for future costs that may be incurred from current production; and it sometimes is not a sure indicator of changes in the quality of people’s lives.

    Disposable and Personal Incomes:

    Disposable income (DI) figure tells us what actually gets into our hands, to dispose-off as we wish. To get the figure we have to subtract from the GNP figure depreciation, all taxes (both direct and indirect), retained earnings of the corporate sector, and then to add transfer payments as also or interest on national debt.

    The disposable income figure is important because it is the sum that people divide between consumption spending and net personal saving. Of course, people also pay interest on loans out of this income. Business people keep a close watch on the trend of DI for obvious reasons.

    Like DI, personal income (PI) removes depreciation and corporate saving from GNP and adds back all transfers incomes received by households.

    The distinction between personal income and disposable income is that the former does not attempt to estimate personal income tax (which is basically a direct tax). If we exclude all direct taxes, PI would be identical with DI.

    Money Income and Real Income:

    The most widely accepted measure of the standard of living of a country is per capita income or GNP per head. The figure is obtained by dividing the GNP by the total population. Changes in the standard of living can be assessed by comparing the figures for per capita income over periods of time.

    In making comparisons between different years, it is important to use figures based on real terms rather than on money terms. The latter relates to prices but the real GNP measures physical quantities of goods and services. An increase in GNP due simply to a rise in prices leaves the community materially no better-off.

    Thus, in order to compare GNP figures at different dates, allowance must be made for changes in prices. This is achieved by a method similar to the use for compiling index numbers. By this means, the output of a given year is valued at the prices of a chosen ‘base’ year—the year on which comparisons are being based. For example, if 1996 is the base year then the value of GNP or per capita income in succeeding years is estimated at constant (1996) prices.

    In fact much of increase in national income figures between two years may be due merely to price increases. For example, in 1996 India’s national income was Rs. 183,800 crores and in 1997 it was Rs. 201,073 crores. This shows a rise of about 9%. But during 1998 the rate of inflation was 4.6%; so this would account for much of the rise in national income. Therefore, the money income has to be deflated by the price index to arrive at real income.

    The equation for determining real GDP is

    money GDP for a given year/price index number for that year x 100

    = real GDP for the given year.

    If exactly the same amount of goods and services were produced in India in 1998 as were produced in 1997, the national income figure on 1998 would still be greater because the prices of the goods and services have risen. The problem arises because the national income for each year is given in terms of current prices.

    One way of overcoming this difficulty is to measure national income at constant prices. By this method, the national income figures for various years are given in terms of the prices prevailing during one particular year. In the right hand column of Table 17.4, the national income figures for 1996, 1997 and 1998 are given at 1996 prices. We now clearly see the effect of eliminating price changes.

    Table 17.4: National Income at Constant Prices (hypothetical figures):

    National Income at Constant Price

    Even so, the comparison is not very accurate. It is because there are various problems connected with the construction and use of index numbers.

    Secondly, there may be an increase in national income figures over time without any increase in output. This may occur because of non­monetary transactions becoming monetary ones. The national income statistics include only transactions involving money. Therefore, if a transaction, which was previously non­monetary, becomes a monetary one, the national income figure will increase, even though the same amount of work is done as before.

    A simple example may make the point clear. Suppose in 1998 a housewife did all the clearing in the house herself, but in 1999 she decided to pay a cleaner Rs. 100 a month to do this. The national income for 1999 would be Rs. 1,200 greater than the 1998 figure for this reason alone—yet there has been no change in the amount of work done. The same argument would apply to a man who previously serviced his own car but who then decided to take it to a garage to be serviced.R

  111. Avatar Chukwu kelvin chimobi 2020/242217 pure and industrial chemistry says:

    There are Three methods of measuring national income
    1) product method
    2) Income method
    3) Expenditure method
    1) product method: In this method, we add the values of output produced or services rendered by the different sectors of the economy during the year in order to calculate the National Income of the country.In this method, we include only the value added by each firm in the production process in the output figure
    2) Income method: It is also called factor income method. In this method, we add all the incomes from ownership of assets and employment before taxation received from all the production activities in an economy.We also need to add the undistributed profits of the private sector and the trading surplus of the public sector corporations.
    However, we need to exclude items not arising from productive activities such as sickness benefits, interest on the national debt, etc.
    3) Expenditure method: In this method measures the total domestic expenditure of the economy. It consists of two elements, which are.
    a) Consumption expenditure and
    b) Investment expenditure.
    a) Consumption expenditure includes consumption expenditure of the household sector on goods and services and consumption outlays of the business sector and public authorities.
    b) Investment expenditure refers to the expenditure on the making of fixed capital such as Plant and Machinery, buildings, etc.

    Chukwu kelvin chimobi
    Pure and industrial chemistry
    2020/242217

  112. Nwaeze francis chidiebube
    2020/242513

    1.) production method or value added 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 process. Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.

    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.

    2.) income method 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.

    3.) expenditure method In this method: national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  113. Avatar Chukwu kelvin chimobi 2020/242217 pure and industrial chemistry says:

    There are three ways of measuring national income which are
    1) product method
    2) income method
    3) Expenditure method
    1) product method: In this method, we add the values of output produced or services rendered by the different sectors of the economy during the year in order to calculate the National Income of the country.
    In this method, we include only the value added by each firm in the production process in the output figure

    2) income method: it is also called the factor method in this method, we add all the incomes from ownership of assets and employment before taxation received from all the production activities in an economy.
    We also need to add the undistributed profits of the private sector and the trading surplus of the public sector corporations.However, we need to exclude items not arising from productive activities such as sickness benefits, interest on the national debt, etc.
    3) Expenditure method: In these method the total domestic expenditure of the economy is measured. It consists of two elements, which are a) Consumption expenditure and
    b) Investment expenditure.
    a) Consumption expenditure includes consumption expenditure of the household sector on goods and services and consumption outlays of the business sector and public authorities.
    b) Investment expenditure refers to the expenditure on the making of fixed capital such as Plant and Machinery,

  114. Avatar Ofili Charles onyekachi Reg number :2020/250415 says:

    The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method.
    1. 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 process.

    2. Income Method:

    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.

    3. Expenditure Method:

    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  115. Avatar Onyenaobiya Chigozie Henry says:

    FOUR METHODS OF MEASURING NATIONAL INCOME:

    THE 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 process.

    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods

    The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.

    2. THE INCOME METHOD: 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.

    3. EXPENDITURE METHOD: In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

    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 process.

    THE VALUE ADDED METHOD: Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.

    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.

  116. 3 Important Methods for Measuring National Income.
    The national income of a country can be measured by three alternative methods:
    (i) Product Method
    (ii) Income Method, and
    (iii) Expenditure Method.

    1. 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 process.Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.

    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.

    2. Income Method:

    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.
    3. Expenditure Method:
    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  117. Avatar Chukw Victor Obinna says:

    Chukwu Victor Obinna
    2020/241459
    Chukwuvictor120@gmail.com

    The national income of a country is the net money value of all service and goods made by citizens in a year.

    This National income of a country can be alculatd using this three methods

    • Total Production Method
    In this method the net output of the various sectors and companies in the economy is added up the get a value of the nations production. The problem to this approach is something called the double counting ,this occurs because in a thrive economy a companies output can also be another’s input.
    • Total Income Method
    This method is link to the production of the country in which the income generated by production is summed up which include revenue from rent,salaries,wages.
    • Total Expenditure Method
    In this method the expenditure that is the cost required for product,maintenance of life,investments and government spendings are subtracted for the avalaible funds to find the national income of the country.

  118. 3 Important Methods for Measuring National Income.
    The national income of a country can be measured by three alternative methods:
    (i) Product Method
    (ii) Income Method, and
    (iii) Expenditure Method.

    1. 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 process.Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.

    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.

    2. Income Method:

    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.
    3. Expenditure Method:
    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  119. Avatar Nnadiukwu Faustina Eberechukwu Reg no:2020/242773 Dept:Pure and industrial chemistry says:

    1-Gross National income: it is total domestic and foreign outputclaimed by residents of a country consisting of gross domestic product plus factor incomes earned by foreign residents minus income earned in the domestic economy by no residents. For most nation’s there is little difference between GDP and GNI.
    To compact nation’s GDP to GNI 3 terms needs to be added to the former
    A- Net compensation receipts b-Net property income c- Net taxes receivable on production and import
    2-Gross national output: it is the total quantity of the total input processed with the use of a production techniques and factors of production.
    C-Gross national expenditure: it is the spending on the goods and services which a country made which are considered necessary at that point in to.e of purchase. Examples of nation expenditure buying of weapon machinery payment for labor import expenses on social amenities
    When all this are put in place the nation’s income can be calculated

  120. Avatar Nnadike Favour Chinyere says:

    The various methods of measuring the national income are:
    1. Product method
    2. Capital method
    3. Expenditure method

    1. 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 process.
    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP. The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.

    2. Income Method: 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.

    3. Expenditure Method: In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  121. Avatar Eze Jane Ogechi says:

    METHODS OF MEASURING NATIONAL INCOME INCLUDE:

    1.The product method
    2.The income method
    3.Thank expenditure method
    4. The value added method

    PRODUCT METHOD: to this method, the total value of final goods and services produced in a country during a year is calculated at market prices. To find out the GNP, the data of all productive activities, such as agricultural products, wood received from forests, minerals received from mines, commodities produced by industries, the contributions to production made by transport, communications, insurance companies, lawyers, doctors, teachers, etc. are collected and assessed at market prices. Only the final goods and services are included and the intermediary goods and services are left out. 

    (2) Income Method:
    According to this method, the net income payments received by all citizens of a country in a particular year are added up, i.e., net incomes that accrue to all factors of production by way of net rents, net wages, net interest and net profits are all added together but incomes received in the form of transfer payments are not included in it. The data pertaining to income are obtained from different sources, for instance, from income tax department in respect of high income groups and in case of workers from their wage bills. 

    (3) Expenditure Method:
    According to this method, the total expenditure incurred by the society in a particular year is added together and includes personal consumption expenditure, net domestic investment, government expenditure on goods and services, and net foreign investment. This concept is based on the assumption that national income equals national expenditure. 

    (4) Value Added Method:
    Another method of measuring national income is the value added by industries. The difference between the value of material outputs and inputs at each stage of production is the value added. If all such differences are added up for all industries in the economy, we arrive at the gross domestic product. 

    Eze Jane Ogechi
    2020/244414
    Pure and industrial chemistry

  122. Avatar Anigbo Mercy Ebele -2020/249986 says:

    METHODS OF MEASURING NATIONAL INCOME
    There are three methods of measuring national income.
    *Product method(value added method)
    *Income method
    *Expenditure method

    PRODUCT METHOD:This is also called inventory method,the most direct method of arriving at an estimate of a country’s national output or income is to add the output figures of all forms in the economy to get the total value of the nation’s output.
    In short the output approach measures national output called gross domestic products (GDP) in terms of the values added by each sector of the economy to avoid the problem of double or multiple counting, we must either use the value or count the total value of all final products.
    Net value of each sector measured in this way indicates the net contribution of the sector to the national income.

    INCOME METHOD:This method approaches national income from the distribution side. Under this method national income is calculated by adding up all the incomes generated in the course of producing national products.
    This method is adopted for estimating the contributions of the remaining sectors, small enterprises,banking and insurance,commerce and transport,liberal arts, domestic service public authorities and foreign sector transaction.
    Income method besides these,there are professionals who employ their own labor and capital like advocates, doctors,engineers,e.t.c.The income of these individuals are called mixed incomes and are also accounted for calculating the national income.This can be expressed as
    y=w+r+i+₦+(R-P),w=wages,r=rents,i=interest,₦=profits, R=exports,P=imports

    EXPENDITURE METHOD:The total expenditure incurred by the society in a particular year is added together to calculate the expenditure of a society, it includes personal consumption expenditure,net domestic investment,government expenditure on consumption as well as capital goods and net exports.
    If entire output is sold within the year,then value of out put will be equal to sales itself.Since incomes from production are earned as a result of expenditure made by other entities on the produced goods and services within the economy,the result of expenditure method should be same total as the product method.However with an exception of avoiding intermediate expenditure in order to evade the problem of double counting,national income under expenditure method can be expressed as
    Value of input =price ×quantity sold
    GDP=Private final consumption expenditure +government final expenditure +gross domestic capital formation +net exports (export-import).

  123. Avatar Ofili Charles onyekachi says:

    The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method:

    (1) product method —In this method national income can be measured as a flow of goods and services during a year

    2. Income Method:

    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.

    (3) Expenditure Method:

    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  124. Avatar Edozie Adaugo Olivia says:

    NAME: Edozie Adaugo Olivia
    REG.NUMBER: 2020/248247
    G -MAIL: adaugolivia2004@gmail.com

    METHOD OF MEASURING THE NATIONAL INCOME
    What is National Income?
    National income refers to the monetary value of the total volume of goods and services produced or the total income earned in a given country over a period of time, usually a year.
    We have three types of methods, they are:
    I. INCOME METHOD
    s This is obtained by adding income received by all the factors of production. The incomes to be added include workers earnings (wages and salaries), profits from entrepreneurs, rents on land, interest from capital, etc.

    2. OUTPUT METHOD
    This method measures the total money value of all goods and services produced in the country in a year. In this method, national income is measured by adding together the value of enterprises which include individuals, firms and the government.
    Output method is also called net product or added value method.

    3. EXPENDITURE METHOD
    This approach calculates the total amount spent on consumption and investment purposes during the year. In other words, it measures the total expenditure on currently produced final goods and services by individuals or households, firms and government plus net export.
    Transfer payment such as payment paid to retired workers, gift to beggars etc are excluded.

  125. Name: Ezeme Lilian ifeoma
    Department :Economics
    Reg no:2020/249501

    The three methods for measuring national income are:
    1. The output Method( value added method)
    2. The Income Method
    3. The Expenditure Method.

    1. The output Method:This can also be known as value added method.
    The most direct method of arriving at an estimate of a country’s national output or income is to add the output figures of all firms in the economy to get the total value of the nation’s output.
    There is a major problem of this product method known as the problem of double counting. It arises due to the fact that the industry’s output is often the input of another industry.
    This problem is avoided by using the concept of ‘value added’, which is the difference between output value and input at each stage of production.

    In other words, each firm’s value added is the value of its output minus the value of the inputs that it purchases from other firm.
    Th output approach measures national output called gross domestic products (GDP) in terms of the values added by each of the sectors of the economy. To avoid the problem of double or multiple counting we must either use the value added method or count the total value of all final products.

    2. The Income Method:
    The second approach is to measure incomes generated by production which includes wages and salaries, Income of self-employed persons ) , rent of land plus royalties earned from patents and copyrights. Thus, it is a partly of return to land and partly a return to capital.

    When we use the income method we have to exclude all transfer incomes such as unemployment benefit, widow pension, child benefits or even interest on government bonds. These are transfer incomes since they are not payments for services rendered — there is no contribution to current real output by the recipient.

    Thus, while using the income method we must only take into account those which have been earned for services rendered and in respect of which there is some corresponding value of output. Interest paid on government bonds is to be excluded for a simple reason.

    The government imposes taxes on some people to pay interest to others. But, the total output (or income) of society does not increase in the process. We may also refer to private transfer in this context. If you receive a gift from your father who is also a resident of India, India’s national income will remain unchanged.

    Factor incomes are normally recorded gross (i.e., before taxes are paid), because this is the measure of the factors’ contribution to output. If we subtract all direct taxes as also provident funds contributions and interest paid by individuals on loans (say to HDFC or to Citi Bank credit cards) from national income we arrive at disposable income. It is so called because people can dispose it off as they wish.
    . All the income generated in production does not find its way into personal incomes. A certain portion of company profit is added to reserves (and not distributed as dividends among shareholders

    It is also to be noted that some of the income derived from economic activity within the country will be paid to foreign owners of assets located in Cameroon, while income from Cameroon-owned assets abroad will be moving in the opposite direction. The income account, therefore, must be adjusted by including the item ‘net income from abroad.

    Finally, stock appreciation adjustment has to be made in order to eliminate the element of windfall gain in the profits received. Similarly, capital gains and losses are to be excluded from national income to avoid double count­ing
    It will is calculated as: wages+salaries+rent+interest+profit

    3. The Expenditure Method:
    National income is calculated by adding up the flows of expenditure needed to purchase the nation’s output. In expenditure method,you add the expenditure of all the economic unit which are household, Government, firms and external sectors.
    However, while estimating the value of national product by the expenditure method we must only record final expenditures.

    We have to exclude all the expen­diture on intermediate goods and services. While measuring national in­come total final expenditures.
    Consumption expenditure refers to all purchases by households of cur­rently produced goods and services, except new houses which are counted as investment. Secondly, consumption of second hand goods like used cars is to be excluded to avoid double counting. Thirdly, we have to measure purchases of goods and services made in a year. We need not measure their actual consumption that occurs during the year (or any other period under considerations.
    It is measured as: C+I+G+(X-M)

  126. Avatar Agu Angela sopuruchukwu says:

    Name: AGU ANGELA SOPURUCHUKWU
    Reg no: 2020/243923
    Department: pure and industrial Chemistry
    Economics Assignment ( methods used in calculating national income)
    These methods includes
    1: Income method; this method is calculated using the method of flow of income. Labour capital,land and entrepreneurship are the four main components of production
    Labour is compensated with wages and salaries, money is compensated with interest the land is compensated with rent and entrepreneurship is compensated with profit
    But certain self employed individuals such as Doctors, Lawyers, Accountants etc use their own labour and capital. Their earning are classified as MIXED INCOME
    Income method can be calculated using the formula
    Employee compensation+ operating surplus ( W+ R+P+I) + Net income+ Net factor income from oversees= INCOME METHOD
    2: Product or value added method; National income can be calculated using this method as a flow of goods and services. During a year we determine the monetary value of all final goods and services generated in an economy . We do not count value of intermediate goods in national income, otherwise the value of goods would be double counted. In counting we use the value addition approach which calculates value addition
    National income can be calculated with this formula
    GNP – cost of capital- Depreciation_ indirect taxes =NATIONAL INCOME
    3: Expenditure method; National income is calculated using this method as a flow of expenditure. The gross domestic product (GDP )is the total of all private consumption expenditures, Government consumption Expenditure, Gross capital formation ( public and private) and net exports are all factors to consider ( export- import) . Flow of expenditure can be calculated using National income + National product=NATIONAL EXPENDITURE.

  127. Avatar Ugwuada blessing chigozie says:

    REG .NO : 2020/245116
    Name: UGWUADA BLESSING CHIGOZIE
    DEPT: PURE AND INDUSTRIAL CHEMISTRY

    There are four difference methods of measuring national income. And it depends on the country availability of datas and the purpose in hand. 
    Will determine the method you will use
    1 . Product method
    2. Income method
    3. Expenditure method
    4. Value added method

    1. 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 process.
    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.
    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP
    In Other to determine the GNP, the data of all productive activities, such as agricultural products, wood received from forests, minerals received from mines, commodities produced by industries, the contributions to production made by transport, etc, are to be collected and assessed at market prices.

    2. INCOME METHOD: Under this method,
    the net income payments received by all citizens of a country in a particular year are added up.
    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.

    3. EXPENDITURE METHOD: In this method,
    total expenditure incurred by the society in a particular year is added together and includes personal consumption, GDP. And GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import)

    4. VALUE ADDED METHOD: Another method of measuring national income is the value added by industries. The difference between the value of material outputs and inputs at each stage of production is the value added. If all such differences are added up for all industries in the economy, we arrive at the gross domestic product.

  128. Gross Domestic Product
    The total value of output in an economy is the Gross Domestic Product (GDP) and is used to measure economic activity changes. GDP encompasses the production of foreign-owned enterprises located in a country following the foreign direct investment.

    There are three different ways to calculate GDP that should all add up to the same amount: The national output is equal to national expenditure (Aggregate demand) which in turn is equal to national income.

    The equation for GDP using this approach is
    GDP = C(Household spending) + I(Capital investment spending) + G(Government spending) + (X(Exports of Goods and Services)-M(Imports of Goods and Services)
    The three different ways to measure GDP are – Product Method, Income Method, and Expenditure Method.

    These three calculating GDP methods yield the same result because National Product = National Income = National Expenditure.
    1. The Product Method:
    In this method, all goods and services produced during the year in various industries are added up. This is also known as value-added to GDP or GDP at the sector of origin’s cost factor. India includes the following items: agriculture and allied services; mining; development, construction, the supply of electricity, gas, and water, transport, communication, and trade; banking and insurance; real estate and property ownership of residential and commercial services and public administration and defence and other services (or government services). It is, in other words, the amount of the added gross value.

    2. The Income Method:
    In a nation that produces GDP during a year, people earn income from their jobs. Thus the sum of all factor incomes is GDP by revenue method: wages and salaries (employee compensation) + rent + interest + benefit.
    3. Expenditure Method:
    This approach focuses on products and services generated during one year within the region.

    GDP is subtracted from the portion of consumption, investment, and government spending expended on imports. Likewise, all manufactured components, such as raw materials used in the manufacture of products for sale, are also exempt.
    Thus GDP by expenditure method at market prices is net export, which can be positive or negative.

  129. Gross Domestic Product
    The total value of output in an economy is the Gross Domestic Product (GDP) and is used to measure economic activity changes. GDP encompasses the production of foreign-owned enterprises located in a country following the foreign direct investment.

    There are three different ways to calculate GDP that should all add up to the same amount: The national output is equal to national expenditure (Aggregate demand) which in turn is equal to national income.

    The equation for GDP using this approach is
    GDP = C(Household spending) + I(Capital investment spending) + G(Government spending) + (X(Exports of Goods and Services)-M(Imports of Goods and Services)
    The three different ways to measure GDP are – Product Method, Income Method, and Expenditure Method.

    These three calculating GDP methods yield the same result because National Product = National Income = National Expenditure.
    1. The Product Method:
    In this method, all goods and services produced during the year in various industries are added up. This is also known as value-added to GDP or GDP at the sector of origin’s cost factor. India includes the following items: agriculture and allied services; mining; development, construction, the supply of electricity, gas, and water, transport, communication, and trade; banking and insurance; real estate and property ownership of residential and commercial services and public administration and defence and other services (or government services). It is, in other words, the amount of the added gross value.

    2. The Income Method:
    In a nation that produces GDP during a year, people earn income from their jobs. Thus the sum of all factor incomes is GDP by revenue method: wages and salaries (employee compensation) + rent + interest + benefit.
    3. Expenditure Method:
    This approach focuses on products and services generated during one year within the region.

    GDP is subtracted from the portion of consumption, investment, and government spending expended on imports. Likewise, all manufactured components, such as raw materials used in the manufacture of products for sale, are also exempt.
    Thus GDP by expenditure method at market prices is net export, which can be positive or negative.

  130. Avatar IKECHUKWU FEARGOD CHINEDU says:

    IKECHUKWU FEARGOD
    Philosophy
    2020/243108
    The following points highlight the three methods for measuring national income. The methods are: 1. The Product (Output) Method 2. The Income Method 3. The Expenditure Method.

    1. The Product (Output) Method:
    The most direct method of arriving at an estimate of a country’s national output or income is to add the output figures of all firms in the economy to get the total value of the nation’s output. The outputs can be grouped into certain product categories corresponding to industries or to sectors (such as the primary sector, secondary sector and the tertiary sector).
    2. The Income Method:
    The second approach is to measure incomes generated by production. The main items of income are shown in Table 1.

    Income from employment (item no. 1 in the Table) is wages and salaries. Income of self-employed persons (item number 2) includes both wages and return on capital owned by self-employed persons (who are treated as firms in microeconomics). Item number 3 is to be interpreted in a broad sense. It includes not only the rent of land but also the rent of buildings, plus royalties earned from patents and copyrights. Thus, it is a partly of return to land and partly a return to capital. Item number 4 is the major part of return on capital to the private sector.

    Likewise, item number 5 is the major part of the return to capital for the public sector. Item number 6 is depreciation which is the reduction in the value of capital goods due to their contribution to the production process. Depreciation or capital consumption allowance represents that part of the value of output which is not earned by any factor but is the value of capital used up in the process of production. This depreciation is to be treated as part of the gross return on capital.
    . The Expenditure Method:
    From the expenditure side national income is calculated by adding up the flows of expenditure needed to purchase the nation’s output. However, while estimating the value of national product by the expenditure method we must only record final expenditures.

    We have to exclude all the expen­diture on intermediate goods and services. While measuring national in­come total final expenditure (TFE) is divided into four broad categories: consumption, investment, government expenditure (spending), exports and imports. These four components may now be further developed.

  131. Avatar Didiugwu Cynthia Nmasichukwu says:

    Didiugwu Cynthia Nmasichukwu
    2019/250235
    Science laboratory technology

    Method of measuring National Income
    There are three ways of measuring the National Income of a country. They are from the income side, the output side and the expenditure side. Thus, we can classify these perspectives into the following methods of measurement of National Income.

    1: production

    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 process.

    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.

    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.

    The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.

    2. Income Method:

    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.

    3. Expenditure Method:

    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  132. Avatar Edozie Adaugo Olivia says:

    NAME: Edozie Adaugo Olivia
    REG. NUMBER: 2020/248247
    EMAIL ADDRESS: adaugolivia2004@gmail.com

    METHOD OF MEASURING THE NATIONAL INCOME
    What is National Income?
    National income refers to the monetary value over a period of time of the output flow of goods and services produced in an economy.
    We have three major ways of measuring the national income, they are;
    1. PRODUCT METHOD
    In this method, all goods and services produced during the year in various industries are added up. This also known as value-added to GDP or GDP at the sector of origins cost factor.

    2. INCOME METHOD
    In a nation that produce GDP during the year, people earn income from their jobs. Thus the sum of all factors incomes is GDP by revenue method: wages and salaries (employees compensation) + rent + interest + benefits.

    3. EXPENDITURE METHOD
    GDP is substrates from the portion of consumption, investment and government spending expended on imports. Likewise, all manufactured components such as, raw materials used in the manufacture of products for sale are also exempt.
    This approach focuses on products and services generation during one year within the region.
    Thus GDP by expenditure method at market price is net export, which can be positive or negative.

  133. Avatar Ezeoru Bernard Somtochukwu says:

    Gross Domestic ProductThe total value of output in an economy is the Gross Domestic Product (GDP) and is used to measure economic activity changes. GDP encompasses the production of foreign-owned enterprises located in a country following the foreign direct investment. There are three different ways to calculate GDP that should all add up to the same amount: The national output is equal to national expenditure (Aggregate demand) which in turn is equal to national income. The equation for GDP using this approach is GDP = C(Household spending) + I(Capital investment spending) + G(Government spending) + (X(Exports of Goods and Services)-M(Imports of Goods and Services)The three different ways to measure GDP are – Product Method, Income Method, and Expenditure Method.These three calculating GDP methods yield the same result because National Product = National Income = National Expenditure.1. The Product Method:In this method, all goods and services produced during the year in various industries are added up. This is also known as value-added to GDP or GDP at the sector of origin’s cost factor. India includes the following items: agriculture and allied services; mining; development, construction, the supply of electricity, gas, and water, transport, communication, and trade; banking and insurance; real estate and property ownership of residential and commercial services and public administration and defence and other services (or government services). It is, in other words, the amount of the added gross value.2. The Income Method:In a nation that produces GDP during a year, people earn income from their jobs. Thus the sum of all factor incomes is GDP by revenue method: wages and salaries (employee compensation) + rent + interest + benefit.3. Expenditure Method:This approach focuses on products and services generated during one year within the region.GDP is subtracted from the portion of consumption, investment, and government spending expended on imports. Likewise, all manufactured components, such as raw materials used in the manufacture of products for sale, are also exempt.Thus GDP by expenditure method at market prices is net export, which can be positive or negative.1. GDP at Factor Cost:GDP is the amount of net value added by all producers within the country at the cost factor. Since the net value added is allocated as revenue to the owners of production factors, the sum of domestic factor incomes and fixed capital consumption is GDP (or depreciation).Thus, GDP at Factor Cost is equal to the sum of  Net value added and Depreciation.GDP at factor cost includes -Compensation of employees, i.e., wages, salaries, etc.Operational surplus, which is both incorporated and unincorporated companies’ business profit. Mixed-Income of Self- employed.Conceptually, GDP at the cost factor and GDP at the market price must be equivalent since the cost factor (payments to factors) of the products produced must be equal to the final value at market prices of the goods and services. The retail value of products and services, however, varies from the earnings of the output factors.2. Net Domestic Product (NDP):The NDP is the value of the economy’s net production throughout the year. During the manufacturing process, some of the country’s capital equipment wears out or becomes redundant each year. A certain percentage of the gross expenditure removed from GDP is the amount of this capital consumption. Net Domestic Product = GDP at the expense of Factor – Depreciation3. Nominal and Real GDP:It is referred to as GDP at current prices or nominal GDP when GDP is calculated based on the current price. On the other hand, if GDP is measured in a given year based on fixed costs, it is referred to as GDP at constant prices, or actual GDP.Nominal GDP is the value of the goods and services produced in a year, calculated at the current market) prices in terms of rupees (money). 

  134. Avatar Dike Promise Akuoma says:

    NAME: DIKE AKUOMA PROMISE
    REG NO: 2020/242499
    DEPARTMENT: ECONOMICS

    PRODUCTION METHOD
    Basically, three steps are involved in applying the production method to compute the national income of an economy. These steps are:
    1) to identify the producing enterprises and to classify them into industrial sectors according to their activities
    2) to estimate net value added at factor cost of each producing enterprise within the domestic territory of an economy and to add up net value added by all the sectors to arrive at net domestic product at factor cost
    3) to estimate net factor income from abroad, which has to be added to net domestic product at factor cost to arrive at net national product at factor cost/ national income of an economy.

    INCOME METHOD
    This involves calculating all the income earned by all the factors of production in a particular year.

    EXPENDITURE METHOD
    This calculates the expenses of the government, firms, individuals in a particular year.

  135. Avatar Nnadi Samuel 2020/245184 pure and industrial chemistry faculty of physical science says:

    There are three ways of measuring the National Income of a country. They are from the income side, the output side and the expenditure side. Thus, we can classify these perspectives into the following methods of measurement of National Income.
    Methods of Measuring National Income
    Product Method
    Income Method
    Expenditure Method

    1. Product Method
    Under this method, we add the values of output produced or services rendered by the different sectors of the economy during the year in order to calculate the National Income.
    The outputs can be grouped into certain product categories corresponding to industries or to sectors (such as the primary sector, secondary sector and the tertiary sector).
    In this method, we include only the value added by each firm in the production process in the output figure.
    Hence, we use the value-added method. The value-added output of all the sectors of the economy is the GNP at factor cost.
    However, this method is unscientific as it adds the value of only those goods and services that are sold in the market or are available for sale in the market
    When we use the output approach, one major problem arises. This is known as the problem of double counting. It arises due to the fact that the industry’s output is often the input of another industry. This is why when we add up the values of all sales, the same output is counted again and again as it is sold by one firm to another. This problem is avoided by using the concept of ‘value added’, which is the difference between output value and input at each stage of production.
    In other words, each firm’s value added is the value of its output minus the value of the inputs that it purchases from other firms. Thus, an automobile manufacturing company’s value added is the value of its output (i.e., the market value of cars) minus the value of tyres and tubes, glass, steel batteries it buys from other firms as also the values of any other inputs, such as electricity and fuel oil that it purchases from other firms.While referring to the concept of value added economists draw a distinc­tion between intermediate goods (like tyres and types which are used as inputs into a further stage of production) and final goods that are the outputs of the economy after eliminating all double (multiple) counting and are used for consumption and not for further production.
    In our example, tyres and tubes, glass, steel, electricity were all intermediate goods used at various stages in the production process while cars were final goods. In fact, all investment products used at various stages in the process lead to the final produce, car.In short, the output approach measures national output called gross domestic products (GDP) in terms of the values added by each of the sectors of the economy. To avoid the problem of double or multiple counting we must either use the value added method or count the total value of all final products.If we use the value added method of estimating national output, we have to include exports but exclude imported materials and services. Imports are automatically excluded since we only record the values added in this country. This will give us the GDP. In general, the GDP is measured at market prices, giving the market value of all output. To this, we must add (or from this we must subtract) the net factor property.
    2. Income Method
    Under this method, we add all the incomes from employment and ownership of assets before taxation received from all the production activities in an economy.
    income approach measures GDP “in terms of the factor-in- come claims generated in the course of producing the total output.”Thus, it is also the Factor Income method. We also need to add the undistributed profits of the private sector and the trading surplus of the public sector corporations.In a year of inflation, it is necessary to make an adjustment for the purely monetary changes in the value of stocks. It is so because a rise in prices increases the value of existing stocks even when there is no change in their volume.
    However, we need to exclude items not arising from productive activities such as sickness benefits, interest on the national debt, etc.When we use the income method we have to exclude all transfer incomes such as unemployment benefit, widow pension, child benefits or even interest on government bonds. These are transfer incomes since they are not payments for services rendered — there is no contribution to current real output by the recipients.National income is not the sum of all personal incomes. The reason is simple. All the income generated in production does not find its way into personal incomes. A certain portion of company profit is added to reserves (and not distributed as dividends among shareholders). Likewise, the profits of public sector (state) enterprises are appropriated by the government and not by persons. But, these undistributed surpluses must be added on to the total of factor incomes received by persons to arrive at national income.
    3. Expenditure Method
    This method measures the total domestic expenditure of the economy. It consists of two elements, viz. Consumption expenditure and Investment expenditure.

    Consumption expenditure includes consumption expenditure of the household sector on goods and services and consumption outlays of the business sector and public authorities.
    Consumption expenditure refers to all purchases by households of cur­rently produced goods and services, except new houses which are counted as investment. Secondly, consumption of second hand goods like used cars is to be excluded to avoid double counting. Thirdly, we have to measure purchases of goods and services made in a year. We need not measure their actual consumption that occurs during the year (or any other period under consideration).
    Investment expenditure refers to the expenditure on the making of fixed capital such as Plant and Machinery, buildings, etc.Investment is expenditure on currently produced capital goods like plant and equipment and housing. Stocks are also included. Investment may be gross or net. Gross investment less depreciation is net investment, or net addition to (purchase of) society’s stock of capital.Money that government spends falls into two categories, one is called transfer payments. These are money paid out for which nothing is given back to the government. One good example is pension paid to retired people. There is a sort of transfer of money from tax-payers to the people receiving pensions.

  136. Avatar Murna livinus says:

    The most prominent trends in shaping a business:

    1. Power is shifting South, East and South East

    New York is still very much the centre of the world, but power (economic, political and social) is becoming more widely distributed, marching South, East and South East: to Latin America, India, China, Russia, Africa and the Middle East, and Central and Eastern Europe.

    Although growth rates in these markets have slowed, the underlying trends persist as economic development lifts countless millions into lives of greater prosperity, aspiration and consumption.

    2. Supply exceeds demand – except in talent

    Despite the events that followed the collapse of Lehman Brothers in 2008, manufacturing production still generally outstrips consumer demand. This is good news for marketing companies, because manufacturers need to invest in branding in order to differentiate their products from the competition.

    Meanwhile, the war for talent, particularly in traditional Western companies, has only just begun. The squeeze is coming from two directions: declining birth rates and smaller family sizes; and the relentless rise of the web and associated digital technologies.

    Simply, there will be fewer entrants to the jobs market and, when they do enter it, young people expect to work for tech-focused, more networked, less bureaucratic companies. It is hard now; it will be harder in 20 years.

    3. Disintermediation (and a post-digital world)

    An ugly word, with even uglier consequences for those who fail to manage it. It’s the name of the game for web giants like Apple, Google and Amazon, which have removed large chunks of the supply chain (think music retailers, business directories and bookshops) in order to deliver goods and services to consumers more simply and at lower cost.

    Take our “frienemy” Google: our biggest trading partner (as the largest recipient of our clients’ media investment) and one of our main rivals, too. It’s a formidable competitor that has grown very big indeed by – some say – eating everyone else’s lunch, but marketing services businesses have a crucial advantage.

    Google (like Facebook, Twitter, LinkedIn and others) is not a neutral intermediary, but a media owner. Google sells Google, Facebook sells Facebook and Twitter sells Twitter.

    We, however, are independent, meaning we can give disinterested, platform-agnostic advice to clients. You wouldn’t hand your media plan to News Corporation or Viacom and let them tell you where to spend your advertising dollars and pounds, so why hand it to Google and co?

    Taking a broader view of our increasingly tech-based world, words like “digital”, “programmatic” and “data” will soon feel out-dated and obsolete as, enmeshed with so many aspects of our daily lives, network-based technologies, automation and the large-scale analysis of information become the norm.

    The internet has been a tremendous net positive for the advertising and communications services business, allowing us to reach consumers more efficiently, more usefully and often more creatively on behalf of clients. But it won’t be long before those clients stop asking our agencies for a “digital” marketing strategy (many already have). It will simply be an inherent part of what we’re expected to offer.

    4. Changing power dynamics in retail

    For the last 20 years or so the big retailers like Walmart, Tesco and Carrefour have had a lot more power than manufacturers because they deal directly with consumers who are accustomed to visiting their stores.

    This won’t change overnight, but manufacturers can now have direct relationships with consumers via the web and e-commerce platforms in particular. Amazon is the example we all think of in the West, but watch out for Alibaba, the Chinese behemoth due to list on the New York Stock Exchange later this summer in what could be the largest IPO in corporate history (and heading a capitalisation of around $200 billion).

    5. The growing reputation of internal communications

    Once an unloved adjunct to the HR department, internal comms has moved up the food chain and enlightened leaders now see it as critical to business success.

    One of the biggest challenges facing any chairman or CEO is how to communicate strategic and structural change within their own organisations. The prestige has traditionally been attached to external communications, but getting internal constituencies on board is at least as important, and arguably more than half of our business.

    6. Global and local on the up, regional down

    The way our clients structure and organise their businesses is changing. Globalisation continues apace, making the need for a strong corporate centre even more important.

    Increasingly, though, what CEOs want is a nimble, much more networked centre, with direct connections to local markets. This hands greater responsibility and accountability to local managers, and puts pressure on regional management layers that act as a buffer, preventing information from flowing and things from happening.

    7. Finance and procurement have too much clout, but this will change

    Some companies seem to think they can cost-cut their way to growth. This misconception is a post-Lehman phenomenon: corporates still bear the mental scars of the crash, and conservatism rules.

    But there’s hope: the accountants will only hold sway over the chief marketing officers in the short-term. There’s a limit to how much you can cut, but top-line growth (driven by investment in marketing) is infinite, at least until you reach 100% market share.

    8. Bigger government

    Governments are becoming ever more important – as regulators, investors and clients. Following the global financial crisis and ensuing recession, governments have had to step in and assert themselves – just as they did during and after the Great Depression in the 1930s and 1940s. And they’re not going to retreat any time soon.

    Administrations need to communicate public policy to citizens, drive health initiatives, recruit people, promote their countries abroad, encourage tourism and foreign investment, and build their digital government capabilities. All of which require the services of our industry.

    9. Sustainability is no longer “soft”

    The days when companies regarded sustainability as a bit of window-dressing (or, worse, a profit-sapping distraction) are, happily, long gone. Today’s business leaders understand that social responsibility goes hand-in-hand with sustained growth and profitability.

    Business needs permission from society to operate, and virtually every CEO recognises that you ignore stakeholders at your peril – if you’re trying to build brands for the long term.

    10. Merger flops won’t put others off

    Despite the failure of one or two recent high-profile mega-mergers, we expect consolidation to continue – among clients, media owners and marketing services agencies. Bigger companies will have the advantages of scale, technology and investment, while those that remain small will have flexibility and a more entrepreneurial spirit on their side.

    FMCG and pharmaceuticals (driven by companies like 3G and Valeant) are where we anticipate the greatest consolidation, while our own industry is likely to see some activity – with IPG and Havas the subject of constant takeover rumours. At WPP we’ll continue to play our part by focusing on small- and medium-sized strategic

  137. Avatar Ezeh Ginika Noeline says:

    NAME: Ezeh Ginika Noeline
    DEPT: Pure and Industrial Chemistry
    REG.NO:2020/241827
    The national income of a country can be measured by three alternative methods;
    (i) product method
    (ii) Income method
    (iii) Expenditure method
    1. Product method: National income is measured as a flow of goods and services. Where money value used for final goods and services produced in an economy during a year is calculated. Final goods are those goods that are directly consumed and not further processed. To avoid the problem of double counting we can use the value addition method in which not the whole value of a commodity but value at each stage of production is calculated to arrive at GDP.

    2. Income method: This method attains that national income is measured as a flow of factor increase. There are generally four factors of production labour, capital, land and entrepreneur. Labour gets wages and salaries, capital gets interest, land gets rent and entrepreneurship gets payment as their renumeration. Persons who employ their own labour earn a mixed income.

    3. Expenditure method: In this method, national income is measured as a flow of Expenditure. GDP is sum total of private consumption expenditure. Government consumption expenditure, Gross capital format (Government and private) and net export (export_ import).

  138. Avatar Ozongwu Favour Adanna says:

    METHOD OF MEASURING NATIONAL INCOME 1: INCOME METHOD. 2: PRODUCT METHOD. 3: EXPENDITURE METHOD. 4: VALUE ADDED METHOD

    1: INCOME METHOD : According to this method the net income payment received by all citizens of a country in a particular year are added up to get the national income

    2: product Method : In this method the total value of final goods and services produced in the country within a year is calculated at market prices.to find out the GNP the data of all the productive activities are collected and assesed at market price
    3: Expenditure Method : According to this method the total expenditure incurred by the society in a particular year is added together and includes net domestic investment , personal consumption expenditure etc this concept is based on the assumption that national income equals national Expenditure
    4: Value Added Method ; the difference between the value of material outputs and inputs at each stage of production is the value added to get the national income .

  139. Avatar NNAMANI RONALD CHINEDU says:

    Name: Nnamani Ronald Chinedu.
    Faculty: Social science.
    Department: Philosophy.
    Reg number: 2020/243123.
    Email: nnamanironaldchinedu@gmail.com.

    Ways to measure national income:
    1. Product method
    2. Income method.
    3. Expenditure method.

    a. Product method: In this method all the goods and services produced are added together. National income can be measured through this method using the flow of goods and services.

    b. Income method: Income method measures national income from the factors of production. All the primary factors of production like wages, rent, interest and profit are added together.

    c. Expenditure method: This method, national income can be measured via the flow of expenditures. This method calculates Gross Domestic Product (GDP) that combines consumption, investment, government spending, net exports. GDP = Consumption + Investment + Government spending + Net Exports.

  140. Avatar OGBODO EUNICE IFEBUCHE... 2020/244990 says:

    National income is an uncertain term which is used interchangeably with national dividend, national output and national expenditure. On this basis, national income has been defined in a number of ways. In common parlance, national income means the total value of goods and services produced annually in a country..

    Method of measuring national income
    The following points highlight the four methods for measuring national income. The methods are: 1. The Product (Output) Method 2. The Income Method 3. The Expenditure Method 4.Value Added Method.

    1. The Product (Output) Method:
    The most direct method of arriving at an estimate of a country’s national output or income is to add the output figures of all firms in the economy to get the total value of the nation’s output. The outputs can be grouped into certain product categories corresponding to industries or to sectors (such as the primary sector, secondary sector and the tertiary sector).

    2. The Income Method:
    The second approach is to measure incomes generated by production. The main items of income are shown in Table 1.
    Income from employment (item no. 1 in the Table) is wages and salaries. Income of self-employed persons (item number 2) includes both wages and return on capital owned by self-employed persons (who are treated as firms in microeconomics). Item number 3 is to be interpreted in a broad sense. It includes not only the rent of land but also the rent of buildings, plus royalties earned from patents and copyrights. Thus, it is a partly of return to land and partly a return to capital. Item number 4 is the major part of return on capital to the private sector.
    Likewise, item number 5 is the major part of the return to capital for the public sector. Item number 6 is depreciation which is the reduction in the value of capital goods due to their contribution to the production process. Depreciation or capital consumption allowance represents that part of the value of output which is not earned by any factor but is the value of capital used up in the process of production. This depreciation is to be treated as part of the gross return on capital.

    3. The Expenditure Method:
    From the expenditure side national income is calculated by adding up the flows of expenditure needed to purchase the nation’s output. However, while estimating the value of national product by the expenditure method we must only record final expenditures.
    We have to exclude all the expenditure on intermediate goods and services. While measuring national in¬come total final expenditure (TFE) is divided into four broad categories: consumption, investment, government expenditure (spending), exports and imports. These four components may now be further developed.

    4. Value Added Method:
    Another method of measuring national income is the value added by industries. The difference between the value of material outputs and inputs at each stage of production is the value added. If all such differences are added up for all industries in the economy, we arrive at the gross domestic product.

  141. Avatar Nwozor Esther oluchi says:

    Methods of measuring national income
    1) product method
    2) income method
    3) expenditure method
    4) value added method
    Explanation
    1) product method: in this method the total value of final goods and services produced in a country during a year is calculated at market prices. To find the GNP, the data of all productive activities, such as agricultural products are collected and assessed at market prices
    2) income method: this method the net income payment received by all citizens of a country in a particular year are added up get the national income.
    3) Expenditure method: this method the total expenditure incurred by the society in a particular year is added together and includes personal consumption expenditure, net domestic investment etc this concept is based on the assumption that national income equals national expenditure.
    4) value added method: this method talks about the difference between the value of material outputs and inputs at each stage of production.

  142. Avatar Nnadi Samuel 2020/245184 pure and industrial chemistry says:

    There are three ways of measuring the National Income of a country. They are from the income side, the output side and the expenditure side. Thus, we can classify these perspectives into the following methods of measurement of National Income.
    Methods of Measuring National Income
    Product Method
    Income Method
    Expenditure Method

    1. Product Method
    Under this method, we add the values of output produced or services rendered by the different sectors of the economy during the year in order to calculate the National Income.
    The outputs can be grouped into certain product categories corresponding to industries or to sectors (such as the primary sector, secondary sector and the tertiary sector).
    In this method, we include only the value added by each firm in the production process in the output figure.
    Hence, we use the value-added method. The value-added output of all the sectors of the economy is the GNP at factor cost.
    However, this method is unscientific as it adds the value of only those goods and services that are sold in the market or are available for sale in the market
    When we use the output approach, one major problem arises. This is known as the problem of double counting. It arises due to the fact that the industry’s output is often the input of another industry. This is why when we add up the values of all sales, the same output is counted again and again as it is sold by one firm to another. This problem is avoided by using the concept of ‘value added’, which is the difference between output value and input at each stage of production.
    In other words, each firm’s value added is the value of its output minus the value of the inputs that it purchases from other firms. Thus, an automobile manufacturing company’s value added is the value of its output (i.e., the market value of cars) minus the value of tyres and tubes, glass, steel batteries it buys from other firms as also the values of any other inputs, such as electricity and fuel oil that it purchases from other firms.While referring to the concept of value added economists draw a distinc­tion between intermediate goods (like tyres and types which are used as inputs into a further stage of production) and final goods that are the outputs of the economy after eliminating all double (multiple) counting and are used for consumption and not for further production.
    In our example, tyres and tubes, glass, steel, electricity were all intermediate goods used at various stages in the production process while cars were final goods. In fact, all investment products used at various stages in the process lead to the final produce, car.In short, the output approach measures national output called gross domestic products (GDP) in terms of the values added by each of the sectors of the economy. To avoid the problem of double or multiple counting we must either use the value added method or count the total value of all final products.If we use the value added method of estimating national output, we have to include exports but exclude imported materials and services. Imports are automatically excluded since we only record the values added in this country. This will give us the GDP. In general, the GDP is measured at market prices, giving the market value of all output. To this, we must add (or from this we must subtract) the net factor property.
    2. Income Method
    Under this method, we add all the incomes from employment and ownership of assets before taxation received from all the production activities in an economy.
    income approach measures GDP “in terms of the factor-in- come claims generated in the course of producing the total output.”Thus, it is also the Factor Income method. We also need to add the undistributed profits of the private sector and the trading surplus of the public sector corporations.In a year of inflation, it is necessary to make an adjustment for the purely monetary changes in the value of stocks. It is so because a rise in prices increases the value of existing stocks even when there is no change in their volume.
    However, we need to exclude items not arising from productive activities such as sickness benefits, interest on the national debt, etc.When we use the income method we have to exclude all transfer incomes such as unemployment benefit, widow pension, child benefits or even interest on government bonds. These are transfer incomes since they are not payments for services rendered — there is no contribution to current real output by the recipients.National income is not the sum of all personal incomes. The reason is simple. All the income generated in production does not find its way into personal incomes. A certain portion of company profit is added to reserves (and not distributed as dividends among shareholders). Likewise, the profits of public sector (state) enterprises are appropriated by the government and not by persons. But, these undistributed surpluses must be added on to the total of factor incomes received by persons to arrive at national income.
    3. Expenditure Method
    This method measures the total domestic expenditure of the economy. It consists of two elements, viz. Consumption expenditure and Investment expenditure.

    Consumption expenditure includes consumption expenditure of the household sector on goods and services and consumption outlays of the business sector and public authorities.
    Consumption expenditure refers to all purchases by households of cur­rently produced goods and services, except new houses which are counted as investment. Secondly, consumption of second hand goods like used cars is to be excluded to avoid double counting. Thirdly, we have to measure purchases of goods and services made in a year. We need not measure their actual consumption that occurs during the year (or any other period under consideration).
    Investment expenditure refers to the expenditure on the making of fixed capital such as Plant and Machinery, buildings, etc.Investment is expenditure on currently produced capital goods like plant and equipment and housing. Stocks are also included. Investment may be gross or net. Gross investment less depreciation is net investment, or net addition to (purchase of) society’s stock of capital.Money that government spends falls into two categories, one is called transfer payments. These are money paid out for which nothing is given back to the government. One good example is pension paid to retired people. There is a sort of transfer of money from tax-payers to the people receiving pensions.

  143. Avatar ODOH MMESOMA JESSICA says:

    NAME: ODOH MMESOMA JESSICA
    REG NUMBER: 202/242893
    DEPARTMENT: COMBINED SOCIAL SCIENCES( ECONOMICS/PHILOSOPHY)

    NATIONAL INCOME
    National Income is the monetary value of the total volume of goods and services produced or total income ( wages, profits, interest, rents), earned during a given period of time usually one year.
    It also refers to the measurement of income and production or level of economic activity at a particular time.
    METHODS OF MEASURING NATIONAL
    INCOME
    Basically, there are three methods of measuring national income, these are;
    (1) INCOME METHOD/APPROACH
    It measures all incomes earned by the various factors of production over a specified period. Such incomes to be added includes wages and salaries, rent, profit, interest e.t.c. It measures the national income as Factor Cost. Thus, the total income is called Gross Domestic Product (G.D.P)
    at factor cost. To avoid double counting, transfer payment, scholarships, grants, social security benefits and gifts are not included.

    (2) OUTPUT METHOD /APPROACH:
    It measures the monetary value of all final goods and services produced in a country by individuals, firms and government over a specific period. To avoid double counting, the figures are collected with the basis of value added. Value added implied value of output less the cost of input. Hence, national income is measures by adding together the value of the net contributions of the various sectors.

    (3) EXPENDITURE METHOD/APPROACH:
    It calculates the total amount spent on consumption and investment purposes over a specified period of time. In other words, it measures the total expenses on currently produced final goods and services by the individuals or households, firms and government plus net export. Transfer payment are excluded.

  144. Avatar Orji ugochukwu says:

    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 process.

    Income Method:

    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.

    Expenditure Method:

    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  145. Avatar Ugwu Francisca Nkechinyerem says:

    Ugwu Francisca Nkechinyerem
    2019/249312
    Science laboratory technology

    Methods for Measuring National Income

    The following points highlight the three methods for measuring national income. The methods are: 1. The Product (Output) Method 2. The Income Method 3. The Expenditure Method.

    1. The Product (Output) Method:
    The most direct method of arriving at an estimate of a country’s national output or income is to add the output figures of all firms in the economy to get the total value of the nation’s output. The outputs can be grouped into certain product categories corresponding to industries or to sectors (such as the primary sector, secondary sector and the tertiary sector).

    GDP and GNP of a Hypothetical Economy

    Problems:

    When we use the output approach, one major problem arises. This is known as the problem of double counting. It arises due to the fact that the industry’s output is often the input of another industry. This is why when we add up the values of all sales, the same output is counted again and again as it is sold by one firm to another. This problem is avoided by using the concept of ‘value added’, which is the difference between output value and input at each stage of production.

    In other words, each firm’s value added is the value of its output minus the value of the inputs that it purchases from other firms. Thus, an automobile manufacturing company’s value added is the value of its output (i.e., the market value of cars) minus the value of tyres and tubes, glass, steel batteries it buys from other firms as also the values of any other inputs, such as electricity and fuel oil that it purchases from other firms.

    As Lipsey has put it, “A firm’s output is defined as its value added; the sum of all values added must be the value, at factor cost, of all goods and services produced by the economy”

    While referring to the concept of value added economists draw a distinc­tion between intermediate goods (like tyres and types which are used as inputs into a further stage of production) and final goods that are the outputs of the economy after eliminating all double (multiple) counting and are used for consumption and not for further production.

    In our example, tyres and tubes, glass, steel, electricity were all intermediate goods used at various stages in the production process while cars were final goods. In fact, all investment products used at various stages in the process lead to the final produce, car.

    In short, the output approach measures national output called gross domestic products (GDP) in terms of the values added by each of the sectors of the economy. To avoid the problem of double or multiple counting we must either use the value added method or count the total value of all final products.

    If we use the value added method of estimating national output, we have to include exports but exclude imported materials and services. Imports are automatically excluded since we only record the values added in this country. This will give us the GDP. In general, the GDP is measured at market prices, giving the market value of all output. To this, we must add (or from this we must subtract) the net factor property.

    What is the gross national product? GNP is the name we give to the total rupee value of the final goods and services produced within a nation during a given year. It is the figure one arrives at when one applies the measuring rod of money to the diverse goods and services—from computer games to machine tools—that a country produces with its land, labour, and capital resources and it equals the sum of the money values of all consumption and investment goods, government purchases, and net exports to other coun­tries.

    GNP is used for various purposes, but the most important one is to measure the overall performance of an economy.

    The gross domestic product (or GDP) is the most comprehensive measure of a nation’s total output of goods and services. It is the sum of the dollar values of consumption, gross investment, government purchases of goods and services, and net exports produced within a nation during a given year.

    2. The Income Method:
    The second approach is to measure incomes generated by production. The main items of income are shown in Table 1.

    Income from employment (item no. 1 in the Table) is wages and salaries. Income of self-employed persons (item number 2) includes both wages and return on capital owned by self-employed persons (who are treated as firms in microeconomics). Item number 3 is to be interpreted in a broad sense. It includes not only the rent of land but also the rent of buildings, plus royalties earned from patents and copyrights. Thus, it is a partly of return to land and partly a return to capital. Item number 4 is the major part of return on capital to the private sector.

    Likewise, item number 5 is the major part of the return to capital for the public sector. Item number 6 is depreciation which is the reduction in the value of capital goods due to their contribution to the production process. Depreciation or capital consumption allowance represents that part of the value of output which is not earned by any factor but is the value of capital used up in the process of production. This depreciation is to be treated as part of the gross return on capital.

    Item number 8 involves stocks and its appreciation. The first one is concerned with the valuation of stock of goods produced but not sold in the same year. These are valued at market prices. This creates a problem in the sense that there is need to record as part of current output (and income) the profits that will be received by the firm only when, and if at all, the goods are sold. Thus, if aggregate inventories of Indian compa­nies go down, national income will raise.

    In a year of inflation, it is necessary to make an adjustment for the purely monetary changes in the value of stocks. It is so because a rise in prices increases the value of existing stocks even when there is no change in their volume. As G.F. Stanlake has put it, “In order to obtain an estimate of the real changes in stocks it is necessary to make a deduction equal to the ‘inflationary’ increase in value.”

    This deduction is treated as stock apprecia­tion in the national income tables (see Table 1). Thus, in order to avoid distortions caused by stock appreciation in an inflationary period, a correc­tion has to be made to eliminate changes in the value of stocks due to price changes alone.

    As Lipsey has put it, changes in stocks only contribute to changes in GDP when their physical quantities change. The correction for the change in the value of existing stocks yields GDP, valued at factor cost and calculated from the income side of the economy.

    Equivalance of National output, income and expenditure

    In short, the income approach measures GDP “in terms of the factor-in- come claims generated in the course of producing the total output.”

    Transfer Income:

    When we use the income method we have to exclude all transfer incomes such as unemployment benefit, widow pension, child benefits or even interest on government bonds. These are transfer incomes since they are not payments for services rendered — there is no contribution to current real output by the recipients.

    Thus, while using the income method we must only take into account those which have been earned for services rendered and in respect of which there is some corresponding value of output. Interest paid on government bonds is to be excluded for a simple reason.

    The government imposes taxes on some people to pay interest to others. But, the total output (or income) of society does not increase in the process. We may also refer to private transfer in this context. If you receive a gift from your father who is also a resident of India, India’s national income will remain unchanged.

    Factor incomes are normally recorded gross (i.e., before taxes are paid), because this is the measure of the factors’ contribution to output. If we subtract all direct taxes as also provident funds contributions and interest paid by individuals on loans (say to HDFC or to Citi Bank credit cards) from national income we arrive at disposable income. It is so called because people can dispose it off as they wish.

    Personal Incomes:

    National income is not the sum of all personal incomes. The reason is simple. All the income generated in production does not find its way into personal incomes. A certain portion of company profit is added to reserves (and not distributed as dividends among shareholders). Likewise, the profits of public sector (state) enterprises are appropriated by the government and not by persons. But, these undistributed surpluses must be added on to the total of factor incomes received by persons to arrive at national income.

    Net Factor (Property) Income from Abroad:

    It is also to be noted that some of the income derived from economic activity within the country will be paid to foreign owners of assets located in India, while income from Indian-owned assets abroad will be moving in the opposite direction. The income account, therefore, must be adjusted by including the item ‘net income from abroad’. Thus, if you receive a dividend income $ 1,000 from an U.S. multinational it will be a part of India’s national income.

    Stock Adjustment and Capital Gains and Losses:

    Finally, stock appreciation adjustment has to be made in order to eliminate the element of windfall gain in the profits received. Similarly, capital gains and losses are to be excluded from national income to avoid double count­ing. Thus, if you sell shores in the stock exchange and make a gain of Rs. 100,000 it will not be a part of India’s national income. However, if a certain portion of it includes factor payment such as broker’s commission it will be a part of national income.

    3. The Expenditure Method:
    From the expenditure side national income is calculated by adding up the flows of expenditure needed to purchase the nation’s output. However, while estimating the value of national product by the expenditure method we must only record final expenditures.

    We have to exclude all the expen­diture on intermediate goods and services. While measuring national in­come total final expenditure (TFE) is divided into four broad categories: consumption, investment, government expenditure (spending), exports and imports. These four components may now be further developed.

    Consumption:

    Consumption expenditure refers to all purchases by households of cur­rently produced goods and services, except new houses which are counted as investment. Secondly, consumption of second hand goods like used cars is to be excluded to avoid double counting. Thirdly, we have to measure purchases of goods and services made in a year. We need not measure their actual consumption that occurs during the year (or any other period under consideration).

    Investment:

    Investment is expenditure on currently produced capital goods like plant and equipment and housing. Stocks are also included. Investment may be gross or net. Gross investment less depreciation is net investment, or net addition to (purchase of) society’s stock of capital.

    Government Expenditure:

    Money that government spends falls into two categories, one is called transfer payments. These are money paid out for which nothing is given back to the government. One good example is pension paid to retired people. There is a sort of transfer of money from tax-payers to the people receiving pensions.

    These transfer payments are not part of the GNP, since they do not arise from production. It is government spending for goods and of services that enters the GNP. Thus, the purchase of a wagon for the Railway Board and the wages of postal workers are put of the GNP.

    Only government expenditure on currently produced goods and services is to be included. This is known as exhaustive expenditure. All transfer expenditure is to be excluded to avoid double counting. As Lipsey has put it, “All government payments to factors of production in return for factor services rendered or payments for goods and services are counted as part of the GDP.”

    Examples are wages and salaries of government employees, government expenditure on goods purchased from farmers for distribution through the public distribution system (ration shops) and on medicines purchased from the private sector for distribution through government hospitals.

    Exports and Imports:

    Since exports represent foreigners’ expenditure on domestic output these are included in GDP. Likewise imports are domestic consumers’ expenditure on foreign goods. Hence, they are not a part of GDP. In the language of Lipsey, “expenditure approach measures the GDP in terms of the categories of expenditure required to purchase the total output of society”.

    Market Price Measure Vs. Factor Cost Measure:

    National expenditure is measured at market prices. These prices differ from the factor cost values by the amount of taxes and subsidies they contain. Thus, national income at market price-indirect taxes + subsidies = national income at factor cost.

    National Income at Market Price and National Income at factor cost

    Residual Error:

    All these measures of national income are supposed to give the same final figure. Any discrepancy among the three measures is due to statistical error. This is known as rounding-up error or residual error, i.e., the error of calculation (not due to any conceptual or methodological problem).

    Problems:

    However, various measurement problems crop up in practice.

    These are the following:

    1. Price Level Changes:

    Firstly, price level changes create complications. Such changes make it difficult to compare the value of output in one year with that of another year. Do we express statistics in terms of market prices or constant prices?

    If in terms of market prices, then figures will be distorted by inflation even though national output may have remained the same. To overcome this, statistics are often expressed in terms of constant prices. This means that a particular year’s prices are chosen to calculate the value of output. In India, for example, 1980-81 is taken as the base year.

    2. Public Goods:

    Secondly, difficulties arise in case of public goods like road, hospitals, defence, schools, etc., which do have market prices. They are parts of GDP because they satisfy human wants and make use of scarce resources. So, the solution lies in measuring their values ‘at cost’. The salaries of government school teachers and policemen are taken as a meas­ure of the values of their outputs.

    The education and health expenditures are included at their cost since they are obviously no different from similar services for which people pay. All government services are therefore included at cost in national output despite the argument that in some instances this could amount to double counting because these services are financed out of people’s taxation.

    3. Self-Supplied Goods and Services:

    Thirdly, people produce same goods and services for themselves. For example, many teachers teach their own children, farmers produce food for themselves and many people drive their own cars, and many people even make their own clothes. In such cases, it is not possible to arrive at a market measurement of the value of the output.

    If identical goods and services are sold in the market place it is possible to give self-provided goods and services an imputed valuation — an estimate of their values can be included in the national income figures. This method is usually used in case of owner-occupied houses (i.e., income from house property).

    The market rents of similar properties are used as measuring rod for the imputed rents of premises occupied by their owners. If there is no reliable market indicator, the assumed (imputed) value must be an arbitrary estimate or the national income accountant may decide to omit the commodity (service) from the calculations of the national output. This latter solution is adopted in case of free services rendered by house­wives like coaching their own children, or cooking food or drawing water from the roadside tube-well or even washing clothes.

    In short, certain goods and services may be provided by a person for himself or herself and it is very difficult to include these in calculations altogether. Many of these self-supplied goods and services will be omitted from national income. However, an imputed value is given to owner occupied houses and an estimate is made of the value of food consumed by farmers themselves.

    Similarly, some goods and services, e.g., services given by housewives, cannot be valued at all and are omitted. However, this creates a difficulty because a housekeeper’s services are calculated in national income.

    4. Underground Economy:

    Moreover, work done in the ‘Black or Underground Economy’, for which there is no official record, is not included in calculations. This is a serious problem in all market-based economies.

    5. Double Counting:

    This problem arises because the outputs of some firms are the inputs of other firms. There are two possible ways of tackling this problem. Prima facie, national income can be measured by adding the values of the final products’.

    A preferable alternative is to total the values added at each stage of produc­tion. Double counting is a common problem faced by all countries. Transfer payments should not be included in the calculations of GNP. In addition, from the value of the products of industries must be deducted the cost of raw materials and products and services provided by other industries. Only the value added is included. Stock appreciation must also be deducted. This occurs when the value of stocks increases because of inflation. But, it represents no increase in real output.

    6. Factor Cost:

    The value of the national output is measured at factor cost, that is, in terms of the payments made to the factors of production for services rendered in producing that output. As Stanlake has put it, “Using market prices as measures of the value of output can be misleading when market prices do not accurately reflect the costs of production (including profits)”.

    In fact, the market prices of most of the commodities that we buy include indirect taxes and some of them include an element of subsidy. Therefore, if we are to arrive at the factor cost value, we have to deduct taxes on expenditure and add subsidies to the market price valuations. It would be misleading to the figures for national income at market prices since it would mean that the value of national output could be increased by raising the rates of indirect taxes such as sales tax or excise duty.

    So, in spite of the supreme importance of the national income estimates, a lot of difficulties arise in calculating national income properly.

  146. Avatar Oha Ujunwa Emmanuella. 2020/242643 says:

    NAME: OHA UJUNWA EMMANUELLA
    REGISTRATION NUMBER: 2020/242643
    DEPARTMENT: ECONOMICS

    METHODS OF MEASURING THE NATIONAL INCOME ARE:

    1). The Product Method
    In this method, all goods and services produced during the year in various industries are added up. This is also known as value-added to GDP or GDP at the sector of origin’s cost factor. 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 process.
    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.

    2. Income Method

    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.

    3. Expenditure Method

    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import)

  147. Avatar Murna livinus says:

    The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method.

    1. Product Method:

    ADVERTISEMENTS:

    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 process.

    National income
    Image Courtesy : peteranthony.org/wordpress/mall.jpg

    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.

    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.

    The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.

    2. Income Method:

    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.

    3. Expenditure Method:

    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports

  148. Avatar Onah miracle chidimma says:

    Eco 102 online assignment
    Name: onah miracle chidimma
    Department: pure and industrial chemistry
    Reg.no: 2020/249311
    Email: onahmiracle2020@gmail.com
    Questions : list and explain The various ways to measures national income
    The following methods are used to measure national income:
    There are:
    1. Product method
    2. Income method
    3. Expenditure method

    1. Product method
    Also known as the value-added method, the product method is based on the net value added to the product at every stage of production. In the product method, the economy is usually divided into different industry sectors, such as fishing, agriculture, and transport.

    The national income is calculated by adding the total output of the companies in the economy. The method shows the contribution of each sector to the national income, hence demonstrating the importance of different sectors relative to each other.

    2. Income method
    In the income method, the national income is measured by adding up the pretax income generated by the individuals and companies in the economy. It consists of income from wages, rent of buildings and land, interest on capital, profits, etc. in an accounting year. The income method shows the national income distribution among different earning groups in the economy.

    3. Expenditure method
    In the expenditure method, the national income is measured by adding up the expenditures made by individuals, companies, and the government. Thus, it combines consumer spending, investments made by companies, net exports, and government spending to calculate the national income.

  149. Avatar Ezea perpetua says:

    Ezea perpetua Ebubechukwu.
    2020/243915.

    Methods of measuring National income.

    The product (output) method: The most direct method of arriving at an estimate of a country’s national output or income is to add the output figures of all firms in the economy to get the total value of the nation’s output.
    The outputs can be grouped into certain product categories corresponding to industries or to sector (such as primary sector, secondary sector and the tetiary sector).

    The income method : from the side of payments made to the primary factors production in the form of rent, wages, interest and profit for the productive service in an accounting year.

    The Expenditure method : From the Expenditure side national income is calculated by adding up the flows of expenditure needed to purchase the nation’s output.
    However, while estimating the value of national product by the Expenditure method must only record final Expenditure.

  150. Avatar OKECHI FRANCIS UCHE says:

    NAME: OKECHI FRANCIS UCHE
    REG. NO: 2020/242648
    DEPARTMENT: ECONOMICS

    The equation for National Income can be measured using this approach is GDP = C(Household spending) + I(Capital investment spending) + G(Government spending) + (X(Exports of Goods and Services)-M(Imports of Goods and Services). The three different ways to measure GDP are;
    I. Product Method
    II. Income Method
    III. Expenditure Method
    These three calculating GDP methods yield the same result because National Product = National Income = National Expenditure.

    1. The Product Method
    In this method, all goods and services produced during the year in various industries are added up. This is also known as value-added to GDP or GDP at the sector of origin’s cost factor. India includes the following items: agriculture and allied services; mining; development, construction, the supply of electricity, gas, and water, transport, communication, and trade; banking and insurance; real estate and property ownership of residential and commercial services and public administration and defence and other services (or government services). It is, in other words, the amount of the added gross value.

    2. The Income Method
    In a nation that produces GDP during a year, people earn income from their jobs. Thus the sum of all factor incomes is GDP by revenue method: wages and salaries (employee compensation) + rent + interest + benefit.

    3. Expenditure Method
    This approach focuses on products and services generated during one year within the region.GDP is subtracted from the portion of consumption, investment, and government spending expended on imports. Likewise, all manufactured components, such as raw materials used in the manufacture of products for sale, are also exempt.Thus GDP by expenditure method at market prices is net export, which can be positive or negative.

  151. Avatar Nechi Andrea Chiamaka says:

    Nechi Andrea Chiamaka
    2020 /243129
    Philosophy
    Social sciences
    Methods of measuring the national income
    1. The measurement of Gross domestic product:
    Gross domestic product (GDP ) is the market value of all the final goods and services produced within a country in a given period of time. GDP uses market prices as market prices reflect the value of different goods and services produced legally in the economy.
    There are some items, however that GDP excludes because their measurement is difficult. illegal activities are excluded such as illegal drugs, male and female prostitutions .it excludes most goods and services produced and consumed at home because they never enter the market place.
    GDP also excludes all intrmiediate goods simply to avoid double counting, An intermediate good is a good used in the production of another good. If a beer brewery firm buys some liters of water to produce beer, the water is an intermediate good and the beer is the final good. If the same quantity of water is purchased by a household for drinking, the water becomes a final good and is included in GDP. GDP includes only the value of final goods. Also , since GDP is measured over a given period of time usually a year, the value of goods items produced in the past (ie . Outside the measuring period of time ) are not included in GDP.
    2. Net domestic product ( NDP ):
    NDP is the market value of all final goods and services produced in a country after subtracting losses from the depreciation. In a given period , a country stock of capital equipment and structures get old and worn out for production to continue , these equipment and structures have to be replaced. The value of replacement is known as depreciation allowance or capital consumption allowance.
    Thus, GDP – D = NDP
    3. Personal income ( PI ):
    Personal income is the income that households and non – corporate business receive unlike , GDP and NDP personal income excludes retained earnings ie. income that corporations have earned in the form of dividends . When a corporation makes some profit , the management may decide for certain reason to pay out all or part of it to the stockholders as dividends or to retain all or part of the profit. The part retained are ploughed back into the business and therefore is not available to the owners of the business as income .
    Thus, NDP -r E + Ty + tp = P1.
    4. Disposable income ( Yd ) :
    Disposable income is the income that households and non corporate businesses have left after satisfying their obligation to the give . It equals personal income minus taxes ( T ) .
    Thus, P1 -T = Yd .

  152. Avatar Ugwu Ezinne Favour says:

    1. PRODUCT (OUTPUT) METHOD: Output figures of all firms in the economy are added to get the total value of the nation’s output. This is the most direct method of calculating the estimate of a country’s national income. However, when this method is used, the problem of double counting arises. Double Counting is “an error that occurs when a total is obtained by summing gross amounts instead of net amounts” (oxfordreference.com). For example, when calculating the value of final products like cars, the value of the products used in manufacturing the car (i.e tyres, tubes, frames etc) are also included. This leads to items being counted more than once , therefore leading to an over-estimation of national product.

    This problem is avoided by calculating the difference between output value and input value at each stages of production. This is the concept of Value-Added. For instance, the firm that manufactures cars calculates the value of its cars minus the values of the tyres, tubes, frames etc that it purchased from other firms. The use of Product Method entails that exports are included during calculation while imports are excluded since the aim is to measure the values added within the country.

    2. THE INCOME METHOD: This method accounts for income earned for services rendered. Transfer incomes such as interest paid on government bonds, unemployment benefits etc are excluded. These are Transfer Incomes because they are not payments for services rendered, since the recipients have no contributions to current real output. Factor incomes are recorded before taxes are paid because it is the measure of factors’ contribution to output. Direct payments, provident funds, interests paid by individuals on loans are subtracted from national income, from which we arrive at Disposable Income (income that people can dispose of as they wish).

    3. EXPENDITURE METHOD: National Income is calculated by adding up the flows of expenditure needed to purchase the nation’s output. However, only fixed expenditures are recorded. All expenditures on intermediate goods and services are excluded. Total Final Expenditure is divided into four categories:

    A. Consumption: Consumption Expenditure refers to all purchases of good and services, except new houses since there are counted as investments. These purchases are made by households. To avoid Double Counting, consumption of second hand goods are excluded.

    B. Investment: This is expenditure on currently produced capital goods such as plants, equipment, housing and stocks.

    C. Spending: Money that government spends falls into two categories:
    i. Transfer Payment: Money paid out for which nothing is given back. For example, pension paid to retired people.
    ii. Exhaustive Expenditure: Money spent by the government on currently produced goods and services. For example, wages and salaries of government employees.

    D. Exports and Imports: Exports are foreigners’ expenditure on domestic outputs, while Imports are domestic consumers’ expenditures on foreign goods.

  153. Avatar Dickson Edith Ezinne says:

    Name: Dickson Ezinne Edith
    Reg no: 2020/242619
    Department: Economics

    The three most important ways of measuring National Income are:

    1. Product Method
    2. Income Method
    3. Expenditure Method

    1. 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 process. Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.

    2. INCOME METHOD:
    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.

    3. EXPENDITURE METHOD:
    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  154. Avatar Jonathan Tracy Amarachi says:

    Name: JONATHAN TRACY AMARACHI
    Regno: 2020/243131
    Dept: philosophy
    The method of measuring the national income of a country has three ways namely:
    1. Product income: inother to get the sum total of income of a country, the rate of goods produced should be known and also calculation of the rate of services provided in the country for a specific period usually a year. Also goods which requires further production that is intermediate goods are also calculated to get the right estimate which is the GDP(gross national product) Which is calculated national GDP Divided by real GDP.
    2. Income method: in this method the national income is measured by the salaries and wages earn by a citizen who is working under a firm and also those who are self employed. In this method all form of individual income collected directly and those taken indirectly are called to get the NDP(net domestic profit) of that year.
    3. Expenidure method: this method is used to calculated all the expenses of the country during a year. Everything the government uses the national funds are being recorded in other to measure the national income, to get the expenditure of the country of the year net profit and net income are added inother to get the NE(national expenditure).

  155. Avatar Elemuo Blessing 2020/243962 says:

    1. 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 process.Only the final goods and services are included and the intermediary goods and services are left out. 
    2. Income method: Under this method, national income is calculated by adding up all the incomes generated in the course of producing national product.The data pertaining to income are obtained from different sources.
    3. Expenditure method: Under this method, the total expenditure incurred by the society in a particular year is added together.
    4. Value added method: It is the difference between the value of material inputs and outputs at each stage of production. The differences are all added up for all industries in the economy to get the gross domestic product

  156. Avatar Ukwuoma+Justice+Tobechukwu says:

    Name : Ukwuoma Justice Tobechukwu
    Reg no: 2020/242967
    Dept.: Eco/Soc Combined Social Science

    Measurement of National Income
    There are three ways of measuring the National Income of a country. They are from the income side, the output side and the expenditure side. Thus, we can classify these perspectives into the following methods of measurement of National Income.

    Methods of Measuring National Income
    Product Method
    Income Method
    Expenditure Method
    1. Product Method

    Under this method, we add the values of output produced or services rendered by the different sectors of the economy during the year in order to calculate the National Income.

    In this method, we include only the value added by each firm in the production process in the output figure.

    Hence, we use the value-added method. The value-added output of all the sectors of the economy is the GNP at factor cost.

    However, this method is unscientific as it adds the value of only those goods and services that are sold in the market or are available for sale in the market

    2. Income Method:

    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.

    3. Expenditure Method:
    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  157. Avatar Nwangwu chigozie Joseph says:

    ECO 102 online Assignment
    Question: list and explain the methods for Measuring National Income:
    Name: Nwangwu chigozie Joseph
    Department: pure and industrial chemistry
    Reg.no: 2020/243612
    Email address: Joseph.nwangwu.243612@unn.edu.ng
    Answer
    There are four methods of measuring national income
    There are:
    1.Product Method
    2. Income Method:
    3.Expenditure Method:
    4. And Value Added Method:
    1. Product Method:
    According to this method, the total value of final goods and services produced in a country during a year is calculated at market prices. To find out the GNP, the data of all productive activities, such as agricultural products, wood received from forests, minerals received from mines, commodities produced by industries, the contributions to production made by transport, communications, insurance companies, lawyers, doctors, teachers, etc. are collected and assessed at market prices. Only the final goods and services are included and the intermediary goods and services are left out.

    2. Income Method:
    According to this method, the net income payments received by all citizens of a country in a particular year are added up, i.e., net incomes that accrue to all factors of production by way of net rents, net wages, net interest and net profits are all added together but incomes received in the form of transfer payments are not included in it. The data pertaining to income are obtained from different sources, for instance, from income tax department in respect of high income groups and in case of workers from their wage bills.

    3. Expenditure Method:
    According to this method, the total expenditure incurred by the society in a particular year is added together and includes personal consumption expenditure, net domestic investment, government expenditure on goods and services, and net foreign investment. This concept is based on the assumption that national income equals national expenditure.

    4. Value Added Method:
    Another method of measuring national income is the value added by industries. The difference between the value of material outputs and inputs at each stage of production is the value added. If all such differences are added up for all industries in the economy, we arrive at the gross domestic product

  158. Avatar Okeke vera mmesoma says:

    There are important methods of measuring National income namely;
    1. Product method
    2. Income method
    3. Expenditure method

    1. Product method: in this method, national income is measured as a flow of goods and services. It is the most direct method of arriving at an estimate of a country’s national input of income by adding the output figures of all firms in the economy to get the total value of the nation’s output. When this method is used, one major problem arises which is known as double counting problem and to avoid this problem we can use the value addition method in which not the whole value of a commodity but value addition at each stage of production is calculated and summed up from other firms to arrive at GDP. The money value is calculated at market prices so sum total is the GDP at market prices. GDP at market price can be converted by many methods.
    2. The income method: in this method, national income is measured as a flow of factor incomes.there are generally four factors of production which are labour, capital, land and entrepreneurship. Labour gets wages and salaries, capital gets interest, land gets rent and entrepreneurship gets profit as their remuneration. Done self employed persons who employ their own labour and capital such as doctors, advocates etc. Their income is called mixed income. The sum total of all these factors income is called NDP at factor costs.
    3. Expenditure method: in this method, national income is calculated by adding up the flows of expenditure needed to purchase the nation’s output. It can be regarded as the frequently used method to measure GDP. The total final expenditure is equal to gross domestic product at market place. This method is also known as income disposal method. To avoid double counting problem expenditure on all intermidate goods and services are excluded , expenditure on purchase of second hand goods are excluded too from national income.
    Okeke vera mmesoma
    2020/247816
    Pure and industrial chemistry

  159. Avatar Mamah paschaline oluchukwu. Reg no. ; 2020/242023. Department; Pure and industrial chemistry. says:

    The various method of measuring national income are :
    a.) Product method.
    b.) Income method.
    c.) Expenditure method.
    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 are referred to those goods which are directly consumed and not used in further production process. Goods which are further used in production process are called intermediate goods. In value of final goods value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of values of goods to avoid the problem of double counting we can use the value addict on method in which not the value of final good value of intermediate good at each stage of production is calculated and the these are summed up to arrive at GDP. The money value is calculated at market prices.

    2.) Income Method; In 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 NDP at factor costs.
    3.) Expenditure Method; In this method, National income is measured as a flow of expenditure. GDP is sum total of private consumption expenditure. GDP is sum total of private consumption expenditure. Government consumption expenditure, gross capital formation ( Government and private) and net exports ( Exports – Imports)

  160. Avatar Omeje+favour+Chidinma.+Reg+no:+20750230GA says:

    National income is the value of goods and services produced by a country during a financial year. It is the aggregate output of different sectors within a time period which is usually a year. Thus, it is the net result of all economic activities of any country during a period of one year and is valued in terms of money.
    There are three main methods of measuring national income
    Product/output method
    Income method
    Expenditure method

    1. Product Method

    Under this method, national Income is measured as a flow of goods and services. The values of output produced or services rendered is added by the different sectors of the economy during the year in order to calculate the national income. In this method we include only the value added by each firm in the production process in the output figure. Hence we use value added method. The value added output of all the sectors of the economy is the GNP at factor cost.
    However, this method is all scientific as it adds the value of only those goods and services those are sold in the market or available for sale in the market.

    2. Income Method

    In this method, national income is measured as a flow of factor incomes.
    All the incomes from employment and ownership of assets before taxation is received from all production activities in an economy.
    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.
    Nevertheless, we also need to add the undistributed profits of the private sectors and the trading surplus of the public sector corporations.
    the sum-total of all these factor incomes is called NDP at factor costs.
    However, we need to exclude items not arising from productive activities such as sickness, benefits, interests of national debts.

    3. Expenditure Method:

    In this method, national income is measured as a flow of expenditure.
    Which consists of two elements : consumption expenditure and investment expenditure.
    Consumption expenditure includes consumption expenditure of all household sector on goods and services and consumption outlays of the business sector and public authorities
    Investment expenditure refers to the expenditure on the making of fixed capital such as plant and machinery buildings and so on.
    GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  161. 1product method
    2income method
    3expenditure method
    1product method:the value of all goods and services produced in different industries during the year is added up . This is also known as value added method to GDP orGDP at factor cost by industry of origin
    2income method: people of a country who produce GDP during a year receive income from their work.thus GDP by income method is sum of all factor incomes:wages and salaries (compensation of employees )+rent+interest,+profit
    3expenditure method:this method focuses on goods and services produced within the country during one year

  162. Avatar Ugwuoke precious ogechi 2020/242363 says:

    1)Product method
    2) income method
    3) expenditure method
    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.

    Income method:under this method , national income is measured as a flow of factor incomes. There are generally four factors of production, labour, capital, land , entrepreneurship v, labour gets a wages and salaries , capital gets interest , land gets rent and enterpreneurship gets profits as their remuneration.

    expenditure method : this method , national income is measured as a flow of expenditure .GDP is sum-total of private consumption expenditure government consumption expenditure and private and net exports (export-import).

  163. Avatar Abia Chidiebere says:

    METHODS OF MEASURING THE NATIONAL INCOME
    1. Production or value added method
    2. Income method
    3. Expenditure method

    1. Production/value added method:
    Here, national income is measured as a flow of goods and services. It is the most direct method of arriving at an estimate of a country national output or income. You add the output figures of all forms in the economy to get the total value of the nation’s output. It can be grouped into certain product categories corresponding to industries or sectors (that is the primary, secondary and tertiary sector). The only problem here is the problem of double-counting. It arises due to the fact that the industry’s output is often the input of another industry. This problem can be avoided by using the concept of ‘value-added’ , which is the difference between output value and include at each stage of production. Lipsey said “a firm’s output is defined as its value added; the sum of all values added must be the value,at factor cost of all goods and services produced by the economy”. The value addition is calculated and is summed up to arrive at GDP.

    2. National income:
    Here, national income is measured as a flow of factor incomes. We measure incomes generated by the factors of production. There are four factors of production and they are; land, labour, capital and entepreneurship. Land gets rent, labour get salaries and wages, capital gets interest and entepreneurship get profit. The sum total of all these factor incomes is known as the NDP at factor cost.

    3. Expenditure method:
    In this method, national income is calculated by adding up the flows of expenditure needed to purchase the nation’s output. While estimating the value of national product by the expenditure method we must only record final expenditures. We exclude all expenditures on intermediate goods and services. Total final expenditure is divided into private consumption, investment, government consumption expenditure(spending), net exports that is export and import. These four components may now be further developed.

  164. Avatar Obieze David Meniru says:

    National income refers to the monetary value over a period of time of the output flow of goods and services produced in an economy.

     The Uses of National Income Statistics
    1.Measuring the level and rate of growth of national income (Y) is essential to keep track of

    2.The rate of economic growth Changes to living standards

    3.Changes to the distribution of income b/w groups  

     Gross Domestic Product–The total value of output in an economy is the Gross Domestic Product (GDP) and is used to measure economic activity changes. GDP encompasses the production of foreign-owned enterprises located in a country following the foreign direct investment. There are three different ways to calculate GDP that should all add up to the same amount: The national output is equal to national expenditure (Aggregate demand) which in turn is equal to national income. The equation for GDP using this approach is GDP = C(Household spending) + I(Capital investment spending) + G(Government spending) + (X(Exports of Goods and Services)-M(Imports of Goods and Services)

    The three different ways to measure GDP are –
    Product Method, Income Method, and Expenditure Method.
    These three calculating GDP methods yield the same result because National Product = National Income = National Expenditure.
    1.The Product Method:In this method, all goods and services produced during the year in various industries are added up. This is also known as value-added to GDP or GDP at the sector of origin’s cost factor. India includes the following items: agriculture and allied services; mining; development, construction, the supply of electricity, gas, and water, transport, communication, and trade; banking and insurance; real estate and property ownership of residential and commercial services and public administration and defence and other services (or government services). It is, in other words, the amount of the added gross value.

    2. The Income Method:In a nation that produces GDP during a year, people earn income from their jobs. Thus the sum of all factor incomes is GDP by revenue method: wages and salaries (employee compensation) + rent + interest + benefit.

    3. Expenditure Method:This approach focuses on products and services generated during one year within the region.GDP is subtracted from the portion of consumption, investment, and government spending expended on imports. Likewise, all manufactured components, such as raw materials used in the manufacture of products for sale, are also exempt.Thus GDP by expenditure method at market prices is net export, which can be positive or negative.

    Name:Obieze David Meniru
    Class:Pure and industrial chemistry
    Matric No:2020/242100

  165. Avatar Ogbuagu+daniella+agnes says:

    Name : Ogbuagu daniella Agnes
    Registration number:2020/242618
    Department: Economics
    Methods of calculating Nation Income

    Measurement of National Income
    There are three ways of measuring the National Income of a country. They are from the income side, the output side and the expenditure side. Thus, we can classify these perspectives into the following methods of measurement of National Income.

    Methods of Measuring National Income
    Product Method
    Income Method
    Expenditure Method

    1. Product Method
    Under this method, we add the values of output produced or services rendered by the different sectors of the economy during the year in order to calculate the National Income.
    In this method, we include only the value added by each firm in the production process in the output figure.

    Hence, we use the value-added method. The value-added output of all the sectors of the economy is the GNP at factor cost.
    However, this method is unscientific as it adds the value of only those goods and services that are sold in the market or are available for sale in the market
    Browse more Topics under National Income
    The concept of National Income
    The concept of Consumption, Saving, and Investment
    Economic Growth
    Economic Fluctuations

    2. Income Method
    Under this method, we add all the incomes from employment and ownership of assets before taxation received from all the production activities in an economy.
    Thus, it is also the Factor Income method. We also need to add the undistributed profits of the private sector and the trading surplus of the public sector corporations.
    However, we need to exclude items not arising from productive activities such as sickness benefits, interest on the national debt, etc.

    3. Expenditure Method
    This method measures the total domestic expenditure of the economy. It consists of two elements, viz. Consumption expenditure and Investment expenditure.
    Consumption expenditure includes consumption expenditure of the household sector on goods and services and consumption outlays of the business sector and public authorities.
    Investment expenditure refers to the expenditure on the making of fixed capital such as Plant and Machinery, buildings, etc.

  166. Avatar ORAJIAKU CHIDERA PRINCEWILL says:

    ORAJIAKU CHIDERA PRINCEWILL

    2020/242647

    ECONOMICS

    National income can be defined as the monetary aggregate of the current
    achievements of an economy, without any double counting. It is estimated, usually
    for one year. Therefore, it is net monetary value of all the goods and services
    produced by the constituents of a national economy over a period of one year.

    There are three methods to measure national income of an economy. These are:
    1) production method or value added method,
    2) income method, and
    3) expenditure method

    PRODUCTION 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 process.

    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.

    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.

    INCOME METHOD

    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.

    EXPENDITURE METHOD

    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  167. Avatar Name: Onebunne Ebube Raphael. [ Dept: Pure and Industrial chemistry ]. ( Reg. No 2020/244896 ) says:

    1. The Product (Output) Method
    2. The Income Method
    3. The Expenditure Method

    1. The Product (Output) Method: The most direct method of arriving at an estimate of a country’s national output or income is to add the output figures of all firms in the economy to get the total value of the nation’s output. The outputs can be grouped into certain product categories corresponding to industries or to sectors (such as the primary sector, secondary sector and the tertiary sector). When we use the output approach, one major problem arises. This is known as the problem of double counting. It arises due to the fact that the industry’s output is often the input of another industry. This is why when we add up the values of all sales, the same output is counted again and again as it is sold by one firm to another. This problem is avoided by using the concept of ‘value added’, which is the difference between output value and input at each stage of production. In other words, each firm’s value added is the value of its output minus the value of the inputs that it purchases from other firms. Thus, an automobile manufacturing company’s value added is the value of its output (i.e., the market value of cars) minus the value of tyres and tubes, glass, steel batteries it buys from other firms as also the values of any other inputs, such as electricity and fuel oil that it purchases from other firms. As Lipsey has put it, “A firm’s output is defined as its value added; the sum of all values added must be the value, at factor cost, of all goods and services produced by the economy”. While referring to the concept of value added economists draw a distinc­tion between intermediate goods (like tyres and types which are used as inputs into a further stage of production) and final goods that are the outputs of the economy after eliminating all double (multiple) counting and are used for consumption and not for further production.
    In our example, tyres and tubes, glass, steel, electricity were all intermediate goods used at various stages in the production process while cars were final goods. In fact, all investment products used at various stages in the process lead to the final produce, car.
    In short, the output approach measures national output called gross domestic products (GDP) in terms of the values added by each of the sectors of the economy. To avoid the problem of double or multiple counting we must either use the value added method or count the total value of all final products.

    2. The Income Method: The second approach is to measure incomes generated by production. Income from employment is wages and salaries. Income of self-employed persons includes both wages and return on capital owned by self-employed persons (who are treated as firms in microeconomics). It includes not only the rent of land but also the rent of buildings, plus royalties earned from patents and copyrights. Thus, it is a partly of return of capital.
    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.

    3. The Expenditure Method: From the expenditure side national income is calculated by adding up the flows of expenditure needed to purchase the nation’s output. However, while estimating the value of national product by the expenditure method we must only record final expenditures. We have to exclude all the expen­diture on intermediate goods and services. While measuring national in­come total final expenditure (TFE) is divided into four broad categories: consumption, investment, government expenditure (spending), exports and imports. These four components may now be further developed.
    (a). Consumption: Consumption expenditure refers to all purchases by households of cur­rently produced goods and services, except new houses which are counted as investment. Secondly, consumption of second hand goods like used cars is to be excluded to avoid double counting. Thirdly, we have to measure purchases of goods and services made in a year. We need not measure their actual consumption that occurs during the year (or any other period under consideration).
    (b). Investment: Investment is expenditure on currently produced capital goods like plant and equipment and housing. Stocks are also included. Investment may be gross or net. Gross investment less depreciation is net investment, or net addition to (purchase of) society’s stock of capital.
    (c). Government Expenditure: Money that government spends falls into two categories, one is called transfer payments. These are money paid out for which nothing is given back to the government. One good example is pension paid to retired people. There is a sort of transfer of money from tax-payers to the people receiving pensions.These transfer payments are not part of the GNP, since they do not arise from production. It is government spending for goods and of services that enters the GNP. Thus, the purchase of a wagon for the Railway Board and the wages of postal workers are put of the GNP. Only government expenditure on currently produced goods and services is to be included. This is known as exhaustive expenditure. All transfer expenditure is to be excluded to avoid double counting. As Lipsey has put it, “All government payments to factors of production in return for factor services rendered or payments for goods and services are counted as part of the GDP.”
    Examples are wages and salaries of government employees, government expenditure on goods purchased from farmers for distribution through the public distribution system (ration shops) and on medicines purchased from the private sector for distribution through government hospitals.

  168. Ejiofor Chiamaka Jane
    2020/248204
    Business Education

    Method of measuring national income

    1. Income method: this is obtained by adding incomes received by all the factors of production ( land, labour, entrepreneur and capital) .the income to be added include wages and salary which is the worker’s earn , profit from entrepreneurs rents on land, interest from capital etc, transfer payment such as payment to old people, beggars, etc are not included inorder to avoid double counting transfer.

    2. Output method: this method measures the total money value of all goods and services produced in the country in the Year. The figures are collected on basis of value added, in order to avoid double counting. The value added is defined as the value of output, less cost of input. In this method , national income is measured by adding together the value of the net contributions of various sectors or enterprises which include individuals, firms and the government. Output method is also called net product or added value method.

    Expenditure method: the expenditure method calculate the total amount spent on consumption and investment purpose during the year. In order words, it measures the total expenditure on currently produced final goods and services by individuals or households, firm and government plus net export. Transfer payments such as pensions paid to retired workers, gift to beggars etc. are excluded

  169. Avatar Mbah Nnamdi Kelvin says:

    Name:Mbah Nnamdi Kelvin
    Reg no:2020/248440
    Dept:pure and industrial Chemistry
    VARIOUS METHODS OF MEASURING NATIONAL INCOME
    1: Expenditure method
    2: income method
    3: Product method(output method)
    4: Value added method

    1: EXPENDITURE METHOD:According to this method, the total expenditure incurred by the society in a particular year is added together and includes personal consumption expenditure, net domestic investment, government expenditure on goods and services, and net foreign investment. This concept is based on the assumption that national income equals national expenditure. 
    From the expenditure side national income is calculated by adding up the flows of expenditure needed to purchase the nation’s output. However, while estimating the value of national product by the expenditure method we must only record final expenditures.

    We have to exclude all the expen­diture on intermediate goods and services. While measuring national in­come total final expenditure (TFE) is divided into four broad categories: consumption, investment, government expenditure (spending), exports and imports. These four components may now be further developed.
    2: INCOME METHOD:According to this method, the net income payments received by all citizens of a country in a particular year are added up, i.e., net incomes that accrue to all factors of production by way of net rents, net wages, net interest and net profits are all added together but incomes received in the form of transfer payments are not included in it. The data pertaining to income are obtained from different sources, for instance, from income tax department in respect of high income groups and in case of workers from their wage bills. 
    3: PRODUCT METHOD:The most direct method of arriving at an estimate of a country’s national output or income is to add the output figures of all firms in the economy to get the total value of the nation’s output. The outputs can be grouped into certain product categories corresponding to industries or to sectors (such as the primary sector, secondary sector and the tertiary sector).
    PROBLEM:
    When we use the output approach, one major problem arises. This is known as the problem of double counting. It arises due to the fact that the industry’s output is often the input of another industry. This is why when we add up the values of all sales, the same output is counted again and again as it is sold by one firm to another. This problem is avoided by using the concept of ‘value added’, which is the difference between output value and input at each stage of production.
    4:VALUE ADDED METHOD:Another method of measuring national income is the value added by industries. The difference between the value of material outputs and inputs at each stage of production is the value added. If all such differences are added up for all industries in the economy, we arrive at the gross domestic product. 

  170. Avatar Michael Chinenye Joy. Reg number: 2020/244369 says:

    The three(3) different ways to measure GDP are:
    1. PRODUCT OR VALUE ADDED METHOD
    2. INCOME OR FACTOR EARNING METHOD
    3. EXPENDITURE OR OUTLAY METHOD

    These three calculating GDP methods yield the same result because National Product= National Income= National Expenditure.

    PRODUCT OR VALUE ADDED 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 not directly consumed and not used in further production process. Goods which are further used in production process are called intermediate goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.
    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e value of final good value of intermediate goods) at each stage of production is calculated and these are summed up to arrive at GDP.
    The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.

    INCOME OR FACTOR EARNING METHOD:
    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 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.

    EXPENDITURE OR OUTLAY METHOD:
    In this method, national income is measured as a flow of expenditure. GDP is the sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  171. Avatar ONAH JUDITH UGOCHI says:

    NAME: ONAH JUDITH UGOCHI
    REG NO: 2020/242646
    DEPT: ECONOMICS
    EMAIL: onahjudith4@gmail.com

    Methods of Measuring National Income.

    1) Product (output) Method

    2)Income Method

    3)Expenditure Method

    1). PRODUCT (OUTPUT) METHOD:
    This method is based on returns made by firms and public corporations concerning the annual value of their output.
    Under this method, we add the values of output produced or services rendered by the different sectors of the economy during the year in order to calculate the National Income.
    This method is used to measure the total value of everything produced in the country during the year. It is a measure of the goods and services becoming available to the nation for consumption or adding to wealth. The money value of goods and services produced in an accounting year is called Gross National Product (GNP). Which is defined by J.R. Hicks as “the collection of goods and services reduced to a common basis by being measured in terms of money.”

    PROBLEMS:
    When we use the product (output) method certain problems arise:

    (I) UNPAID SERVICE:
    In less developed countries like India, people do more things for themselves. They grow their own food, make their own clothes, etc. They do not pay for all the commodities and services they need. The national income of such a country will be that much less because most people provide so many unpaid (free) services for themselves.
    The GNP figure includes only productive activity for which payment is received. Any unpaid service (s) will not be included.
    Therefore, any service which people undertake for themselves will be excluded from the figures. This indicates one area for caution in comparing national income figures for different countries.

    (II) DOUBLE COUNTING:
    Another problem in drawing up the production figures is the need to avoid including the same item twice.
    In order to avoid this problem of double counting, it is only the value added by each industry which is included, i.e., the value of the industry’s output minus the value of the materials, etc. bought from other industries. Thus, we need figures of only the final selling values of goods and services.

    (III) STOCK APPRECIATION:
    Another problem arises due to stock appreciation. Some final goods will be added to stocks and not incorporated in other goods in the current year. On the other hand, the value of current output will include the using up of stocks inherited from the past. These problems are dealt with by including net additions to stocks, which may be positive or negative, in the domestic product.

    (IV) INTERNATIONAL TRANSACTIONS:
    The value of goods and services produced within the country includes their import content. Imports yields incomes to owners of resources in other countries. They are part of the domestic products of other countries. Hence, they must be deducted from the GNP. Exports yield income to the domestic factors. So they are included in the domestic product. Their import is dealt with in the general deduction of imports.

    2) THE INCOME METHOD:
    The income method of calculating the national income is based on figures collected from the income tax departments.
    Under this method, we add all the incomes from employment and ownership of assets before taxation received from all the production activities. It includes the total of all wages and salaries earned, rents and royalties, interest received on loans, and the profits of companies, private businesses, farms, fisherman and traders.

    PROBLEMS:

    (I) MIXED INCOME:
    ‘Mixed’ income are derived from a mixture of factors. So, in practice, it is virtually impossible to separate the returns to land, labour and capital.

    (II) TRANSFER INCOME:
    It is important to include in the calculations only those incomes which correspond to the production of goods and services. Otherwise there may be double-entry, i.e., the same income may be counted twice.
    The sum-total of all incomes includes both factor incomes and transfer incomes. Since the latter are paid of the former without any goods and services being made available as a result, they exaggerate the flow of income in real terms. They are double-counted, once as factor incomes and again as transfer incomes. They must, therefore, be excluded from national income.

    (III) IMPUTED INCOME:
    One item which often creates problem is ‘ownership of dwellings’. People who let out houses for rent are providing a service. So the rents received by them must be included in the national income figures. But account must also be taken of owner- occupied houses. No rent is actually paid here. But the houses provide the same service to the dwellers as rented accommodation. The problem is overcome by imputing a rent to such houses, i.e., the amount the owners would probably have received if they had rented the houses.

    (IV) GOVERNMENT SERVICES:
    There are many services provided by the government of a country which satisfy the collective wants of the community as opposed to the individual wants of the citizens.
    Each citizen does not pay according to the amount of such services that he (or she) wants. A pacifist has to help to pay for defence; a wealthy person has to help in the provision of social health and education services which he or she may never use. This list of anomalies could be greatly extended. Is it, then, realistic to include the incomes derived from producing such services as part of the income derived from satisfying wants?
    Government services are included in the national income on the ground that the community pays for them simply because it surely needs them.

    (V) NET FACTOR INCOME FROM ABROAD:
    Some people and firms earn income by producing goods and services or owning property in other countries. Such incomes will not be included in calculations based on the earnings of factors within the country (the domestic income) and must be added to the total.
    On the other hand, some of the domestic income is earned by non-residents as a result, for example, of the operation of foreign firms within a country. These incomes must be deducted when computing the national income. These two adjustments can be made together by adding net income from abroad if it is positive or by deducting it if it is negative.

    3). THE EXPENDITURE METHOD:
    A third way of arriving at this same total is to add up the total national expenditure. We have to include private and government expenditure and the value of newly — created capital.
    The expenditure method depends on some­what less accurate statistics because of the great number of retail outlets where most of the relevant transactions take place. Information about retailing, wholesaling and the provision of some service is obtained from the Census of Distribution. Additional information is obtained from sales tax (and excise duty) returns.

    PROBLEMS:

    I) EXPORTS AND IMPORTS:
    Some of the goods produced in this country will be sold abroad.
    For instance, when Nigeria products are sold in China, the expenditure takes place in China and is, therefore, not included in the figure.
    Yet the value of those products will be included in the figure for total production in Nigeria.
    Therefore, there is again a danger of losing the equality of Total Production and Total expenditure. To remove this danger we must subtract the value of imports.

    (II) INDIRECT TAXES AND SUBSIDIES:
    We do not have an expenditure figure equivalent to the amount which producers receive for producing the goods and services during the year.
    In cases like this, where there are taxes on goods and services (‘indirect taxes’ as they are called), the amount of the tax must be deducted from the expenditure figures.
    When indirect taxes have been subtracted and subsidies added the total arrived at is gross domestic expenditure at factor cost, which will be the same as gross domestic product at factor cost.

    (III) FACTOR INCOME FROM ABROAD:
    We have covered income received from the sale of goods and services produced in this country. But some people in this country receive income as a result of their ownership of property abroad. For example, they receive interest on profits on their assets abroad.
    So, to get a true indication of the amount that production has added to the country’s wealth, one should set aside a certain amount of the year’s output to cover this wearing out of capital. Hence, the final item in the calculation — capital consumption (or depreciation). When this amount is deducted, the result is Net National Product at factor cost, or, in other words, National Income.

  172. Avatar Ibezim Blessing Chinyere says:

    Name: Ibezim Blessing Chinyere
    Reg no. : 2020/242630
    Email : ibezimblessing36@gmail.com
    Methods of measuring national income are;
    1. Product method
    2. Income method
    3. Expenditure method

    Product method: in this method national income is measured as a flow of goods and services. The money value of all final goods and services produced in an economy during a year is calculated. Final goods here refer to those goods which are directly consumed and not used in further production process. Goods which are further used in production process called intermediate goods.

    Income method: here, national income is measured as a flow of factor income. There are four factors of production which are, labour, capital, land and entrepreneurship. The reward for labour is wages and salary, the reward for capital is interest, for land is rent, for entrepreneurship is profit.

    Expenditure method: the total domestic expenditure of the economy is measured in this method. It consist of two elements, (i)consumption expenditure, which included expenditure of the household sector on goods, services and consumption outlays of the business sector and public authorities(ii)investment expenditure, which refers to the expenditure on the making of fixed capital such as plant and machineries, building, etc.

  173. Avatar Friday+Blessing+Samuel,+Reg+no:2020/247922 says:

    NAME:Friday Blessing Samuel
    REG.NO-:2020/247922
    DEPT:Philosophy
    The national income of a country can be measured by three alternative methods, Namely;(i) Product Method
    (ii) Income Method, and
    (iii) Expenditure Method
    PRODUCT METHOD:- Under this method, we add the values of output produced or services rendered by the different sectors of the economy during the year in order to calculate the National Income.
    In this method, we include only the value added by each firm in the production process in the output figure.
    Hence, we use the value-added method. The value-added output of all the sectors of the economy is the GNP at factor cost.
    However, this method is unscientific as it adds the value of only those goods and services that are sold in the market or are available for sale in the market.
    INCOME METHOD:-
    Under this method, we add all the incomes from employment and ownership of assets before taxation received from all the production activities in an economy.
    Thus, it is also the Factor Income method. We also need to add the undistributed profits of the private sector and the trading surplus of the public sector corporations.
    However, we need to exclude items not arising from productive activities such as sickness benefits, interest on the national debt, etc.

    EXPENDITURE METHOD
    Expenditure Method

    This method measures the total domestic expenditure of the economy. It consists of two elements, namely;
    i) Consumption expenditure and
    ii) Investment expenditure.

    Consumption expenditure includes consumption expenditure of the household sector on goods and services and consumption outlays of the business sector and public authorities.
    Investment expenditure refers to the expenditure on the making of fixed capital such as Plant and Machinery, buildings, etc.

  174. Avatar Dina Olumide Nkem says:

    Hello sir, I am Dina Olumide Nkem, an 100 level student from the department of Pure and industrial chemistry, with the reg number: 2020/241136. Below my answers to the newly given assignment:
    1. The Product (Output) Method:
    The most direct method of arriving at an estimate of a country’s national output or income is to add the output figures of all firms in the economy to get the total value of the nation’s output. The outputs can be grouped into certain product categories corresponding to industries or to sectors (such as the primary sector, secondary sector and the tertiary sector).
    2. The Income Method:
    The second approach is to measure incomes generated by production.
    3. The Expenditure Method:
    From the expenditure side national income is calculated by adding up the flows of expenditure needed to purchase the nation’s output. However, while estimating the value of national product by the expenditure method we must only record final expenditures.
    We have to exclude all the expen­diture on intermediate goods and services. While measuring national in­come total final expenditure (TFE) is divided into four broad categories: consumption, investment, government expenditure (spending), exports and imports.

  175. Avatar UGWUOKE CHIKWADO says:

    Name: UGWUOKE CHIKWADO
    Reg. Number: 2020/242634
    E-mail: ugwuokechikwado599@gmail.com
    1. The income method: 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.

    2. Expenditure Method: In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

    This method measures the total domestic expenditure of the economy. It consists of two elements, viz. Consumption expenditure and Investment expenditure.

    Consumption expenditure includes consumption expenditure of the household sector on goods and services and consumption outlays of the business sector and public authorities.

    Investment expenditure refers to the expenditure on the making of fixed capital such as Plant and Machinery, buildings, etc.

    3. 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 process.

    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.

    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.
    The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.

  176. 1 Product method:in this mehod, 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 refers to those goods which are directly consumed and not used in further production process.Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.

    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.

    ADVERTISEMENTS:The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.
    2 Income Method: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.
    3Expenditure Method:In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  177. Avatar Abugu Emmanuel Chinonso 2020/243684 says:

    The three different ways to measure GDP are – Product Method, Income Method, and Expenditure Method.

    The product method: This is the method, where national income is measured as a flow of goods and services. The money value of all final goods and services produced in an economy during a year are being calculated. Final goods here refer to those goods which are directly consumed and not used in further production process.

    Income method: This is the method, where the national income is measured by adding up the pretax income generated by the individuals and companies in the economy. It consists of income from wages, rent of buildings and land, interest on capital, profits, etc.

    Expenditure method: The expenditure method is the most common way to calculate national income. The expenditure method formula for national income is C + I + G (X – M), where consumer spending is denoted by C, investment is denoted by I, government spending is denoted by G, X stands for exports and imports is represented as M.

  178. Igboanugo jacinta ugochukwu
    2020/243842
    Education Economic
    09068380234

    Methods for Measuring National Income: 3 Methods | Economics
    The following are the three methods for measuring national income. The methods are:
    1..Expenditure method
    2. The Product (Output) Method
    3The Income Method

    1. Expenditure
    Money that government spends falls into two categories, one is called transfer payments. These are money paid out for which nothing is given back to the government. One good example is pension paid to retired people. There is a sort of transfer of money from tax-payers to the people receiving pensions.

    These transfer payments are not part of the GNP, since they do not arise from production. It is government spending for goods and of services that enters the GNP. Thus, the purchase of a wagon for the Railway Board and the wages of postal workers are put of the GNP.

    2. The Product (Output) Method:
    The most direct method of arriving at an estimate of a country’s national output or income is to add the output figures of all firms in the economy to get the total value of the nation’s output. The outputs can be grouped into certain product categories corresponding to industries or to sectors (such as the primary sector, secondary sector and the tertiary sector).When we use the output approach, one major problem arises. This is known as the problem of double counting.
    In other words, each firm’s value added is the value of its output minus the value of the inputs that it purchases from other firms. Thus, an automobile manufacturing company’s value added is the value of its output (i.e., the market value of cars) minus the value of tyres and tubes, glass, steel batteries it buys from other firms as also the values of any other inputs, such as electricity and fuel oil that it purchases from other firms
    3. The Income Method:
    The second approach is to measure incomes generated by production.
    Income from employment is wages and salaries. Income of self-employed persons includes both wages and return on capital owned by self-employed persons (who are treated as firms in microeconomics). is to be interpreted in a broad sense. It includes not only the rent of land but also the rent of buildings, plus royalties earned from patents and copyrights. Thus, it is a partly of return to land and partly a return to capital. It is the major part of return on capital to the private sector.

  179. Igboanugo jacinta ugochukwu
    2020/243842
    Education Economic
    09068380234

    Methods for Measuring National Income: 3 Methods | Economics
    The following are the three methods for measuring national income. The methods are:
    1. The Product (Output) Method
    2. The Income Method
    3. The Expenditure Method.

    1. The Product (Output) Method:
    The most direct method of arriving at an estimate of a country’s national output or income is to add the output figures of all firms in the economy to get the total value of the nation’s output. The outputs can be grouped into certain product categories corresponding to industries or to sectors (such as the primary sector, secondary sector and the tertiary sector).When we use the output approach, one major problem arises. This is known as the problem of double counting.
    In other words, each firm’s value added is the value of its output minus the value of the inputs that it purchases from other firms. Thus, an automobile manufacturing company’s value added is the value of its output (i.e., the market value of cars) minus the value of tyres and tubes, glass, steel batteries it buys from other firms as also the values of any other inputs, such as electricity and fuel oil that it purchases from other firms
    2. The Income Method:
    The second approach is to measure incomes generated by production.
    Income from employment is wages and salaries. Income of self-employed persons includes both wages and return on capital owned by self-employed persons (who are treated as firms in microeconomics). is to be interpreted in a broad sense. It includes not only the rent of land but also the rent of buildings, plus royalties earned from patents and copyrights. Thus, it is a partly of return to land and partly a return to capital. It is the major part of return on capital to the private sector.

    3. Government Expenditure:
    Money that government spends falls into two categories, one is called transfer payments. These are money paid out for which nothing is given back to the government. One good example is pension paid to retired people. There is a sort of transfer of money from tax-payers to the people receiving pensions.

    These transfer payments are not part of the GNP, since they do not arise from production. It is government spending for goods and of services that enters the GNP. Thus, the purchase of a wagon for the Railway Board and the wages of postal workers are put of the GNP.

  180. Avatar OBIAKOR CHIKA VINCENT says:

    Name: OBIAKOR CHIKA VINCENT.
    Reg No: 2020/246576.
    Email Address :Chikaibiakor47@gmail.Com

    Methods of Measuring National income.

    The following points highlight the top four methods of measuring national income (NI). The methods are: 1. Product Method 2. Income Method 3. Expenditure Method 4. Value Added Method.

    Method # 1. Product Method:
    According to this method, the total value of final goods and services produced in a country during a year is calculated at market prices.

    To find out the GNP, the data of all productive activities, such as agricultural products, wood received from forests, minerals received from mines, commodities produced by industries, the contributions to production made by transport, communications, insurance companies, lawyers, doctors, teachers, etc. are collected and assessed at market prices.

    #Note that :
    Only the final goods and services are included and the intermediary goods and services are left out.

    Method # 2. Income Method
    This is another method of measuring N.I. In this method, the net income payments received by all citizens of a country in a particular year are added up, i.e., net incomes that accrue to all factors of production by way of net rents, net wages, net interest and net profits are all added together but incomes received in the form of transfer payments are not included in it.

    The data pertaining to income are obtained from different sources, for instance, from income tax department in respect of high income groups and in case of workers from their wages bills.

    Method # 3. Expenditure Method:
    According to this method, the total expenditure incurred by the society in a particular year is added together and includes personal consumption expenditure, net domestic investment, government expenditure on goods and services, and net foreign investment. This concept is based on the assumption that national income equals national expenditure.

    Method # 4. Value Added Method:
    ADVERTISEMENTS:

    Another method of measuring national income is the value added by industries. The difference between the value of material outputs and inputs at each stage of production is the value added. If all such differences are added up for all industries in the economy, we arrive at the gross domestic product.

  181. Igboanugo jacinta ugochukwu
    2020/243842
    Education Economic
    09068380234

    Methods for Measuring National Income: 3 Methods | Economics
    The following points highlight the three methods for measuring national income. The methods are:
    1. The Product (Output) Method
    2. The Income Method
    3. The Expenditure Method.

    1. The Product (Output) Method:
    The most direct method of arriving at an estimate of a country’s national output or income is to add the output figures of all firms in the economy to get the total value of the nation’s output. The outputs can be grouped into certain product categories corresponding to industries or to sectors (such as the primary sector, secondary sector and the tertiary sector).When we use the output approach, one major problem arises. This is known as the problem of double counting.
    In other words, each firm’s value added is the value of its output minus the value of the inputs that it purchases from other firms. Thus, an automobile manufacturing company’s value added is the value of its output (i.e., the market value of cars) minus the value of tyres and tubes, glass, steel batteries it buys from other firms as also the values of any other inputs, such as electricity and fuel oil that it purchases from other firms
    2. The Income Method:
    The second approach is to measure incomes generated by production.
    Income from employment is wages and salaries. Income of self-employed persons includes both wages and return on capital owned by self-employed persons (who are treated as firms in microeconomics). Item number 3 is to be interpreted in a broad sense. It includes not only the rent of land but also the rent of buildings, plus royalties earned from patents and copyrights. Thus, it is a partly of return to land and partly a return to capital. Item number 4 is the major part of return on capital to the private sector.
    ges alone.

    As Lipsey has put it, changes in stocks only contribute to changes in GDP when their physical quantities change. The correction for the change in the value of existing stocks yields GDP, valued at factor cost and calculated from the income side of the economy.

    Government Expenditure:
    Money that government spends falls into two categories, one is called transfer payments. These are money paid out for which nothing is given back to the government. One good example is pension paid to retired people. There is a sort of transfer of money from tax-payers to the people receiving pensions.

    These transfer payments are not part of the GNP, since they do not arise from production. It is government spending for goods and of services that enters the GNP. Thus, the purchase of a wagon for the Railway Board and the wages of postal workers are put of the GNP.

  182. Avatar NJOKU CHISOM PRECIOUS says:

    NATIONAL INCOME
    The national income is the total income accruing to all the factors of production in a country. It is the estimated value of goods and services produced in a country during a specified period of time, usually a year.

    METHODS OF MEASURING NATIONAL INCOME
    1. Income method
    2. Output/product method
    3. Expenditure method

    INCOME METHOD:. This is the adding together of all the incomes received by all the factors of production in the form of wages and salaries. To avoid double counting, payments are not included. The income which is included must be that which arises from the production of goods and services.
    OUTPUT/PRODUCT METHOD:. This is measured by adding together the value of the net contributions of the various sectors in the country.
    EXPENDITURE METHOD:. This method of measuring national income measures the total expenses made on goods and services by individuals,firms and government in a country. In using this approach, it is necessary to avoid double counting by identifying expenditure of a final nature. Transfer payments such as pensions paid to retired workers,gifts to beggars are also not included.

    NJOKU CHISOM PRECIOUS
    Department: ECONOMICS
    Reg no. 2020/245277
    Email: njiokuchisom@gmail.com

  183. Avatar OMEKE PRECIOUS OGECHI says:

    Name: OMEKE PRECIOUS OGECHI
    Reg No: 2020/243294
    Department: PUBLIC ADMINSTRATION AND LOCAL GOVERNMENT
    Course code: Eco 102
    QUESTIONS.
    What are the methods used in measuring national income.
    ANSWERS
    National income is the value of the aggregate output of the different sectors during a certain time period.
    National income is an uncertain term which is used interchangeably with national dividend, national output and national Expenditure.

    METHODS OF MEASURING NATIONAL INCOME

    1) Product method :- This method is also known as value added method. In this method, the value of all goods and services produced in different industries during the year is added up.

    2) Income method :- The income method is the sum of all factor incomes which includes: wages and salaries e.t.c.

    3) Expenditure method :- This method focuses on goods and services produced within the country during one year.

  184. Avatar UBAH VIVIAN CHIOMA says:

    Name: UBAH VIVIAN CHIOMA
    Dept: EDUCATION ECONOMICS
    Reg.No: 2020/243849

    METHODS OF MEASURING NATIONAL INCOME

    National income means the value of goods and services produced by a country during a financial year. Thus, it is the net result of all economic activities of any country during a period of one year and is valued in terms of money.
    3 Important Methods for Measuring National Income
    The national income of a country can be measured by three alternative methods:
    (i) Product Method
    (ii) Income Method, and
    (iii) Expenditure Method.

    1. 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 process.
    which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.
    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP. The money value is calculated at market prices so sum-total is the GDP at market prices.

    2. Income Method: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.

    3. Expenditure Method:
    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).
    Factor income earned by factors of production is spent in the form of expenditure on purchase of goods and services produced by firms.

    1. This method measures national income as sum total of final expenditures incurred by households, business firms, government and foreigners.

    2. This total final expenditure is equal to gross domestic product at market price, i.e. ∑Final Expenditure = GDPMP.

    3. This method is also known as ‘Income Disposal Method’.

    Components of Final Expenditure:

    Expenditure is undertaken by all the sectors of an economy: Households, Government, Firms and the Foreign Sector.The various components of final expenditure are:

    1. Private Final Consumption Expenditure (PFCE):
    It refers to expenditure incurred by households and private non-profit institutions serving households on all types of consumer goods, i.e. durable (except houses), semi-durable, non-durable goods and services.

    i. PFCE = Household Final Consumption Expenditure + Private Non-Profit Institutions Serving Households Final Consumption Expenditure
    ii. PFCE includes expenditures incurred by normal residents, whether in the domestic territory or abroad. So, any expenditure incurred by residents during their foreign tour/travel will be added in PFCE. However, any expenditure incurred by non-residents and foreign visitors in the domestic market will be deducted from PFCE.

    2. Government Final Consumption Expenditure (GFCE):
    It refers to the expenditure incurred by general government on various administrative services like defense, law and order, education etc. Government produces goods and services with the aim of social welfare without any intention of earning profits.

    3. Gross Domestic Capital Formation (GDCF) or Gross Investment:
    It refers to the addition to capital stock of the economy. It represents the expenditure incurred on acquiring goods for investment by the production units located within the domestic territory.

    There are two components of GDCF:
    (i)Formation: It refers to the expenditure incurred on purchase of fixed assets.
    This expenditure is generally divided into three sub-categories:

    (a) Gross Business Fixed Investment: It includes expenditure on the purchase of new plants, machinery, equipment’s, etc.
    (b) Gross Residential Construction Investment: It includes expenditure on purchase or construction of new houses by the households.
    (c) Gross Public Investment:It includes expenditure on construction of flyovers, roads, bridges etc. by the government.

    (ii) Inventory Investment (Change in Stock): It refers to the physical change in the stock of raw material, semi-finished goods and finished goods lying, with the producers. It is included as an investment item because it represents the goods produced but not used for current consumption. It is calculated as the difference between the closing stock and the opening stock of the year.It means,
    GDCF = Gross Fixed Capital Formation + Inventory Investment; or
    GDCF = Gross Business Fixed Investment + Gross Residential Construction Investment + Gross Public Investment + Inventory Investment.
    It is important to understand that purchase of shares and debentures, either old or new, is not included in investment. For example, if I have purchased 500 shares of Reliance Industries, it may be an investment from my point of view, but for economy, it is simply a transfer of purchasing power and not an investment.

    4. Net Exports (X – M): It refers to the difference between exports and imports of a country during a period of one year. The sum total of four components of final expenditure gives Gross Domestic Product at Market Price (GDPMP), i.e. GDPMP = PFCE + GFCE + GDCF + (X-M)
    1. Exports (X) refer to expenditure by foreigners on purchase of domestic products. The exported goods have been produced within the country’s domestic territory So; they are included in output of an economy.
    2. Imports (M) is the expenditure by residents on foreign products. Imports are deducted to obtain domestic product as they are not produced within the domestic territory.
    3. Instead of treating exports and imports separately, the difference between the two is taken and is termed as Net Exports.

    Steps of Expenditure Method:
    The steps involved in calculating National Income by Expenditure Method are:
    Step 1: Identify the Economic Units incurring Final Expenditure: All the economic units, which incur final expenditure within the domestic territory, are classified under 4 groups:
    (i) Household sector;
    (ii) Government sector;
    (iii) Producing sector;
    (iv) Rest of the world sector.

    Step 2: Classification of Final Expenditure: Final expenditures incurred by the above mentioned economic units are estimated and classified under the following heads:
    (i) Private Final Consumption Expenditure (PFCE)
    (ii). Government Final Consumption Expenditure (GFCE)
    (iii).Gross Domestic Capital Formation (GDCF)

    Step 3: Calculate Domestic Income (NDPFC): By subtracting the amount of depreciation and net indirect taxes from GDPMP, we get domestic income, i.e. NDPFC = GDPMP – Depreciation – Net Indirect Taxes.

    Step 4: Estimate net factor income from abroad (NFIA) to arrive at National Income: In the final step, NFIA is added to domestic income to arrive at National Income.
    National Income (NNPFC) = NDPFC+ NFIA

    Precautions of Expenditure Method:
    The various precautions to be taken while using the Expenditure Method are:
    1. Expenditure on Intermediate Goods will not be included in the national income as it is already included in the value of final expenditure. If it is included again, it will lead to double counting of expenditures.
    2. Transfer Payments are not included as such payments are not connected with any productive activity and there is no value addition.
    3. Purchase of second-hand goods will not be included as such expenditure has already been included when they were originally purchased. Such goods do not affect the current flow of goods and services. However, any commission or brokerage on such goods is included as it is a payment made for productive service.
    4. Purchase of financial assets (shares, debentures, bonds etc.) will not be included as such transactions do not contribute to current flow of goods and services. These financial assets are mere paper claims and involve a change of title only. However, any commission or brokerage on such financial assets is included as it is a productive service.
    5. Expenditure on own account production (like production for self-consumption, imputed value of owner occupied houses, free services from general government and private non-profit making institutions serving households) will be included in the national income since these are productive services.
    Thanks

  185. Avatar Mamah Faith Okwukwe says:

    NAME: MAMAH FAITH OKWUKWE
    REG NO: 2020/245317
    DEPARTMENT: ECONOMICS
    EMAIL ADDRESS: http://www.mamahokwukwe24@gmail.com
    LEVEL: FIRST YEAR
    SUBJECT CODE: ECO 102
    METHODS OF MEASURING NATIONAL INCOME
    National income is referred to as the total income earned in a given country over a period of time, usually a year. It has 3 methods by which it is measured, they are:
    1) Product or output method
    2) Income method
    3) Expenditure method
    1) PRODUCT OR OUTPUT METHOD: This method measures the total money value of all goods and services produced in the country in a year. This adds the output figures of all firms in the economy to get the total value of the nation’s output. Since the nation’s output can be categorized into primary sector, secondary sector and tertiary sector; this method is therefore associated with the problem of double counting.
    Double counting usually arises due to the fact that the industry’s output is often the input of another sector’s industry. This problem is avoided when figures are collected on the basis of value added.
    Value added is defined as the value of output less cost of input or simply, the difference between output value and input at each stage of production. In this method, If value added is not done, then we add the total values of all the final products.

    2) INCOME METHOD: This is the total value of income gotten from all the factors of production. National income using this method is obtained by adding incomes received by all the factors of production.
    The incomes to be added include worker’s earnings, profits from entrepreneurs, rents on land, interest from land and mixed income from self employed individuals who employ their own labor.

    3)EXPENDITURE METHOD: This expenditure approach calculates the total amount spent on consumption and investment purposes during the year. In other words, it measures the total expenditure on currently produced final goods and services by individuals or households, firms and government plus net export.
    We must only record final expenditures and excludes expenditure on intermediate goods and services, transfer payment such as payments paid to retired workers, gift to beggers and so on. That is what gives the formula to be:
    National income = C + I + G + (X – M)
    Where C = private consumption expenditure
    I = government investment expenditure
    G = government expenditure on consumption
    X = exports
    M = imports

  186. Avatar Egwim chinonso Theresa says:

    NAME:EGWIM CHINONSO THERESA
    REG NO:2020/242593
    LEVEL: 100
    EMAIL ADDRESS: egwimtheresa2@gmail.com

    National income refers to the monetary value over a period of time of the output flow of goods and services produced in an economy.

    The Uses of National Income Statistics
    Measuring the level and rate of growth of national income (Y) is essential to keep track of:
    The rate of economic growth
    Changes to living standards
    Changes to the distribution of income b/w groups

    * Gross Domestic Product
    The total value of output in an economy is the Gross Domestic Product (GDP) and is used to measure economic activity changes. GDP encompasses the production of foreign-owned enterprises located in a country following the foreign direct investment.

    There are three different ways to calculate GDP that should all add up to the same amount: The national output is equal to national expenditure (Aggregate demand) which in turn is equal to national income.

    The equation for GDP using this approach is
    GDP = C(Household spending) + I(Capital investment spending) + G(Government spending) + (X(Exports of Goods and Services)-M(Imports of Goods and Services)

    1. GDP at Factor Cost:
    GDP is the amount of net value added by all producers within the country at the cost factor. Since the net value added is allocated as revenue to the owners of production factors, the sum of domestic factor incomes and fixed capital consumption is GDP (or depreciation).
    Thus,
    GDP at Factor Cost is equal to the sum of Net value added and Depreciation.
    GDP at factor cost includes –
    Compensation of employees, i.e., wages, salaries, etc.
    Operational surplus, which is both incorporated and unincorporated companies’ business profit.
    Mixed-Income of Self- employed.
    Conceptually, GDP at the cost factor and GDP at the market price must be equivalent since the cost factor (payments to factors) of the products produced must be equal to the final value at market prices of the goods and services. The retail value of products and services, however, varies from the earnings of the output factors.

    2. Net Domestic Product (NDP):
    The NDP is the value of the economy’s net production throughout the year. During the manufacturing process, some of the country’s capital equipment wears out or becomes redundant each year. A certain percentage of the gross expenditure removed from GDP is the amount of this capital consumption.
    Net Domestic Product = GDP at the expense of Factor – Depreciation

    3. Nominal and Real GDP:
    It is referred to as GDP at current prices or nominal GDP when GDP is calculated based on the current price. On the other hand, if GDP is measured in a given year based on fixed costs, it is referred to as GDP at constant prices, or actual GDP.
    Nominal GDP is the value of the goods and services produced in a year, calculated at the current market) prices in terms of rupees (money).

    Three Important Methods for Measuring National Income
    There are three techniques to compute national income:
    Income Method
    Product/ Value Added Method
    Expenditure Method

    1.Income Method
    National income is calculated using this method as a flow of factor incomes. Labor, capital, land, and entrepreneurship are the four main components of production. Labour is compensated with wages and salaries, money is compensated with interest, the land is compensated with rent, and entrepreneurship is compensated with profit.
    Furthermore, certain self-employed individuals, such as doctors, lawyers, and accountants, use their own labour and capital. Their earnings are classified as mixed-income. NDP at factor costs is the total of all of these factor incomes.
    National Income is calculated as a flow of income in this case.
    NI can be calculated as follows:
    Employee compensation + Operating surplus (w + R + P + I) + Net income + Net factor income from overseas = Net national income.
    Where,
    Wage stands for wage and salaries
    R stands for rental income.
    P stands for profit.
    I stand for mixed-income.

    2. Product/ Value Added Method
    National income is calculated using this method as a flow of goods and services. During a year, we determine the monetary value of all final goods and services generated in an economy. The term “final goods” refers to goods that are consumed immediately rather than being employed in a subsequent manufacturing process.
    Intermediate goods are goods that are used in the manufacturing process. Because the value of intermediate products is already included in the value of final goods, we do not count the value of intermediate goods in national income; otherwise, the value of goods would be double-counted.
    To avoid duplicate counting, we can use the value-addition approach, which calculates value-addition (i.e., the value of the end good plus the value of the intermediate good) at each stage of production and then adds them together to get GDP.
    The sum-total is the GDP at market prices since the money value is measured at market prices. The methods outlined before can be used to convert GDP at market price.
    The flow of goods and services is used to calculate national income.
    NI can be calculated as follows:
    G.N.P. – COST OF CAPITAL – DEPRECIATION – INDIRECT TAXES = NATIONAL INCOME

    3. Expenditure Method
    National income is calculated using this method as a flow of expenditure. The gross domestic product (GDP) is the total of all private consumption expenditures. Government consumption expenditure, gross capital formation (public and private), and net exports are all factors to consider (Export-Import).
    As said above, the flow of expenditure is used to calculate national income.
    The Expenditure technique can be used to calculate NI as follows:

    National Income+National Product+National Expenditure=National Income+National Product+National Expenditure=National Expenditure.

  187. Avatar Asogwa Chinedu Felix says:

    Asogwa Chinedu Felix
    Reg no:-2019/242355

  188. Avatar Agbo eberechi says:

    The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method.

    1. 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 process.
    National income Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.
    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP
    The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.

    2. Income Method:
    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.
    3. Expenditure Method:
    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import.

  189. NAME:Uwaezuoke Favour Ifunanya
    REG NO: 2020/242628
    Dept: Economics
    Methods of Measuring National Income

    1.)Product Method

    2.)Income Method

    3.)Expenditure Method

    1. Product Method
    Under this method, we add the values of output produced or services rendered by the different sectors of the economy during the year in order to calculate the National Income.
    In this method, we include only the value added by each firm in the production process in the output figure.
    Hence, we use the value-added method. The value-added output of all the sectors of the economy is the GNP at factor cost.
    However, this method is unscientific as it adds the value of only those goods and services that are sold in the market or are available for sale in the market.

    2. Income Method
    Under this method, we add all the incomes from employment and ownership of assets before taxation received from all the production activities in an economy.
    Thus, it is also the Factor Income method. We also need to add the undistributed profits of the private sector and the trading surplus of the public sector corporations.
    However, we need to exclude items not arising from productive activities such as sickness benefits, interest on the national debt, etc.

    3. Expenditure Method
    This method measures the total domestic expenditure of the economy. It consists of two elements, Consumption expenditure and Investment expenditure.
    Consumption expenditure includes consumption expenditure of the household sector on goods and services and consumption outlays of the business sector and public authorities.
    Investment expenditure refers to the expenditure on the making of fixed capital such as Plant and Machinery, buildings.

  190. Avatar NWANOSIKE CHINONSO AMOS says:

    NAME: NWANOSIKE CHINONSO AMOS
    MATRIC NO: 2020/242603
    COURSE CODE: ECO 102
    COURSES TITLE: PRINCIPLES OF ECONOMICS 2
    LEVEL: 100

    METHODS OF MEASURING NATIONAL INCOME

    The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method.

    1. 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 process.

    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.

    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.
    The money value is calculated at market prices so, sum-total is the GDP at market prices. GDP at market price can be converted into by methods.
    Product method is therefore calculated thus;
    Y=NP_NE
    Where Y is income, NP is National product and NE is National Expenditure

    2. INCOME METHOD
    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.

    Apart from this, 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.
    Income method is therefore calculated thus;
    Y=wages and salaries+Rent+Interest+Profit.

    3. EXPENDITURE METHOD:
    In this method, national income is measured as a flow of expenditure. GDP is the sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).
    Expenditure method is therefore calculated as;
    C+I+G+(X_M)
    Where;
    C=consumption
    I=Income/Investment
    G=Government Consumption Expenditure
    X=Exports
    M=Imports.

  191. Avatar Ogbobe Faith Okwukwe. Reg no: 2019/243087 says:

    There are three methods of measuring national income and they include:
    1. 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 process. Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods. To avoid the problem of double counting, we can use the value_addition method in which not the whole value of a commodity but value addition ( i.e value of final good and value of intermediate good ) at each stage of production is calculated and these are summed up to arrive GDP.
    2. Income method:
    In a nation that produces GDP during a year, people earn income from their jobs. Thus the sum of all factor incomes is GDP by revenue method wages and salaries ( employee compensation ) + rent+ interest + benefit.
    3. Expenditure method:
    In the expenditure method, national income is measured by adding up the expenditure made by adding up the individuals companies and government spending to calculate the national income.

  192. Avatar Isi Vincent Offorbuike says:

    Name: Isi Vincent Offorbuike
    Reg No: 2019/249461
    Department: Science Laboratory Technology
    Option: Microbiology/virology
    E_mail: vincent.isi.249461@unn.edu.ng

    There are a number of concepts pertaining to national income and methods of measurement relating to them.

    (A) Gross Domestic Product (GDP):
    GDP is the total value of goods and services produced within the country during a year. This is calculated at market prices and is known as GDP at market prices. Dernberg defines GDP at market price as “the market value of the output of final goods and services produced in the domestic territory of a country during an accounting year.”

    There are three different ways to measure GDP:

    Product Method, Income Method and Expenditure Method.

    (B) GDP at Factor Cost:
    GDP at factor cost is the sum of net value added by all producers within the country. Since the net value added gets distributed as income to the owners of factors of production, GDP is the sum of domestic factor incomes and fixed capital consumption (or depreciation).
    Thus GDP at Factor Cost = Net value added + Depreciation.

    GDP at factor cost includes:

    (i) Compensation of employees i.e., wages, salaries, etc.

    (ii) Operating surplus which is the business profit of both incorporated and unincorporated firms. [Operating Surplus = Gross Value Added at Factor Cost—Compensation of Employees—Depreciation]

    (iii) Mixed Income of Self- employed.

    Conceptually, GDP at factor cost and GDP at market price must be identical/This is because the factor cost (payments to factors) of producing goods must equal the final value of goods and services at market prices. However, the market value of goods and services is different from the earnings of the factors of production.

    In GDP at market price are included indirect taxes and are excluded subsidies by the government. Therefore, in order to arrive at GDP at factor cost, indirect taxes are subtracted and subsidies are added to GDP at market price.

    Thus, GDP at Factor Cost = GDP at Market Price – Indirect Taxes + Subsidies.

    (C) Net Domestic Product (NDP):
    NDP is the value of net output of the economy during the year. Some of the country’s capital equipment wears out or becomes obsolete each year during the production process. The value of this capital consumption is some percentage of gross investment which is deducted from GDP. Thus Net Domestic Product = GDP at Factor Cost – Depreciation.

  193. Avatar IGBOKWE GLORIA SOMTOOCHUKWU says:

    NAME: IGBOKWE GLORIA SOMTOOCHUKWU
    REG NUMBER: 2020/245316
    DEPARTMENT: ECONOMICS
    EMAIL: igbokwegloria2003@gmail.com

    WAYS/METHODS OF MEASURING NATIONAL INCOME
    1. INCOME APPROACH: This approach measures all incomes earned by various factors of production ( land , labour, capital and entrepreneur) in the form of wages, interest , rent and profit. It measures the national income at factor cost. Symbolically,
    GNP=W+I+R+P+Depreciation+tax
    Where W is wages, I is interest , R is rent , P is profit . To avoid double counting, transfer payment in the form of gift donation, pension,gratuities etc . are not included. Business expenses are excluded. This method is widely used in West Africa.
    2. OUTPUT/ NET PRODUCT APPROACH: This approach measures the total monetary value of all goods and services produced by various sectors of the economy. Here , the value of net contribution of each sector is added. Therefore, to avoid double counting, income is measured on a value added basis. Value added basis is a technique used to measure the worthor value ech sector contributes to the production of a product. Value added is the value of output minus cost of input. Only final product or value added should be considered. Moreover, the value of exports are included while excluding the value of owner-occupied houses, services of voluntary organization etc are included. Symbolically, GNP=P¡ *Qi
    Where P=price of the commodity
    Q= Quantity of that commodity.
    This approach measures national income at market prices.

    3. EXPENDITURE APPROACH: This method measures on consumption and investment made by individuals,firms and government on currently produced final goods and services during the year. To avoid double counting, only expenditure on final goods and services are included. Expenses on goods and services used in production ( inputs) are excluded. Symbolically,
    GNP or Y=C +I +G + ( X -M)
    Where;
    Y = National income
    C = private consumption expenditure
    I = private investment Expenditure
    G= Government expenditure on consumption and investment
    X= Exports
    M=imports

  194. Avatar Ekwe Okwuchukwu Cletus says:

    Name:Ekwe Okwuchukwu Cletus
    Department: Economics
    Reg. No:2020/242587

    The various methods of measuring the national income are:
    1. The output method
    2. The income method
    3.The expenditure method

    1.The Output Method
    The output method calculates the total value of final output of gods and services produced in the economy over a specified period of time.It is important to note that all final goods and services must be included regardless of whether they are sold to consumers, government, foreigners or to other firms in the form of capital equipment.To avoid the problem of double counting,and hence overestimation of the country’s total output.Intermefiate of goods must not be included in the final total.Alternatively,the problem of double counting by each firm at different stages of production,rather than final output.

    2.The National Method
    Since national income arises from the production of goods and services by the factors of production, another way of calculating the value of total output is to sum all of the incomes that these factors receive for services.It involves the summation of all monetary values of the wages and salaries,rent, interest,profits and dividends.This method is referred to as income method of measuring the level of economic activity in any time period (usually one year).It is important to note that only income that gave been received in return for productive services should be included.

    3. The Expenditure Method
    National income of a country can be obtained through the method of expenditure approach.In this method,the total expenditure incurred by all economic agents in the country in a particular year are added up. These includes the expenditure of individual consumers on goods and services, corporate investments, spending and purchase done by the government on behalf of the public.

  195. Avatar Anyanwu+Chinazaekpere+Mavis says:

    NAME: ANYANWU CHINAZAEKPERE MAVIS
    REG NO: 2020/243851
    DEPT: EDUCATION/ECONOMICS

    The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method .
    1. 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 process.
    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.
    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.

    2. Income Method:
    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.According to this method, the net income payments received by all citizens of a country in a particular year are added up, i.e., net incomes that accrue to all factors of production by way of net rents, net wages, net interest and net profits are all added together but incomes received in the form of transfer payments are not included in it. The data pertaining to income are obtained from different sources, for instance, from income tax department in respect of high income groups and in case of workers from their wage bills. 

    3. Expenditure Method:
    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import). This concept is based on the assumption that national income equals national expenditure. 

  196. Avatar Muomegha Maryann Tochi says:

    Name: Muomegha Maryann Tochi
    Reg no: 2020/246802
    Email address: maryannmuomegha@gmail.com
    Department: philosophy

    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 refers to those goods which are directly consumed and not used in further production process. Goods which are further used in production process are called intermediate goods

    2. Income method: 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 income is called NDP at factor cost.

    3: Expenditure method: In this method national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure,gross capital formation( Government and private) and net exports(Export-Import)

  197. Avatar Ani emmanuella ngozi says:

    Ani Emmanuella Ngozi
    Business education
    2020/249748
    METHODS OF MEASURING THE NATIONAL INCOME
    Firstly nation income refers to the value of all goods and services produced in a country during a financial year
    1)PRODUCT METHOD:The net value of goods and services produced at market price are totaled, to find out the gross product. GDP =total product of industry +service + agriculture sector
    2)INCOME METHOD:the net income payment received by all citizen of a country in a particular year added up net income that accrue to the production by way Of net rent, wage, net interest and not profit are all added together.
    3) EXPENDITURE METHOD :This method is used in measuring the national income as the sum total of expenditure mad by individual on personal consumption of firm on private investment and government authorities on government purchases
    That are say to be incomes from production are earned as a result of expenditure made by other entities on the goods and services produced within the country. The result of expenditure method should be same total as the product method
    GDP=C+I+G+(X-M)

  198. Avatar Oluchukwu+Favour+Onyedikachi says:

    The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method.

    1. Product Method (Value added)
    Product method measures the output of the country. It is also called inventory method. Under this method, the gross value of output from different sectors like agriculture, industry, trade and commerce, etc., is obtained for the entire economy during a year. The value obtained is actually the GNP at market prices. Care must be taken to avoid double counting.
    The value of the final product is derived by the summation of all the values added in the productive process. To avoid double counting, either the value of the final output should be taken into the estimate of GNP or the sum of values added should be taken.

    2. Income Method (Factor Earning Method)
    This method approaches national income from the distribution side. Under this method, national income is calculated by adding up all the incomes generated in the course of producing national product.

    3. The Expenditure Method (Outlay method)
    Under this method, the total expenditure incurred by the society in a particular year is added together. To calculate the expenditure of a society, it includes personal consumption expenditure, net domestic investment, government expenditure on consumption as well as capital goods and net exports.

  199. Avatar Ugwuanyi Kate Oluchukwu says:

    1. 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 process.

    2. Income Method:

    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.
    3. Expenditure Method:

    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  200. Avatar ADONU CHISOM PETER*2020/246581*CSS(ECONOMICS/PHILOSOPHY) says:

    METHODS OF MEASURING NATIONAL INCOME. There are four methods of measuring national income: Product method, Income method, Expenditure method and Value Added method.
    PRODUCT METHOD: According to this method, the total value of final goods and services produced in a country during a year is calculated at market prices. To find out the GNP, the data of all productive activities, such as agricultural products, wood received from forests, minerals received from mines, commodities produced by industries, the contributions to production made by transport, communications, insurance companies, lawyers, doctors, teachers, etc. are collected and assessed at market prices. Only the final goods and services are included and the intermediary goods and services are left out.
    INCOME METHOD: According to this method, the net income payments received by all citizens of a country in a particular year are added up, i.e., net incomes that accrue to all factors of production by way of net rents, net wages, net interest and net profits are all a added together but incomes received in the form of transfer payments are not included in it. The data pertaining to income are obtained from different sources, for instance, from income tax department in respect of high income groups and in case of workers from their wage bills.
    EXPENDITURE METHOD: According to this method, the total expenditure incurred by the society in a particular year is added together and includes personal consumption expenditure, net domestic investment, government expenditure on goods and services, and net foreign investment. This concept is based on the assumption that national income equals national expenditure.
    VALUE ADDED METHOD: Another method of measuring national income is the value added by industries. The difference between the value of material outputs and inputs at each stage of production is the value added. If all such differences are added up for all industries in the economy, we arrive at the gross domestic product.

  201. Avatar Nnam Charles Chiemerie says:

    There are three methods of measuring national income:
    1) Product method or value added method:The value added method is one of the three methods to determine national income. The other two methods are the expenditure method and income method.

    It is also known as product method or output method, and its primary objective is to calculate the national income by taking the value added to a product during the various stages of production into account.

    To determine the national income using this method, the first step involves calculating the net value added at factor cost (NVAfc). Calculating NVAfc requires net indirect taxes to be deducted.

    This method of calculating the national income arranges the economy into different categories of industries such as transportation, fishing, agriculture, communication, etc.

    As this method focuses on net value addition by each of the components in production, hence the following elements should be excluded or subtracted from the output of the enterprise.

    Raw materials consumption
    Capital consumption
    Net Indirect Taxes
    Also Read: What is Circular Flow of Income?

    Steps to Compute National Income
    Step 1: Identification and classification of producing units

    Identify all the producing units in the domestic economy and classify them into the primary, secondary, and tertiary sector.

    Step 2: Estimation of gross value added of each sector

    Gross value added (GVA) = Value of output – Intermediate consumption

    Step 3: Estimation of GDP

    Then add GVA of all the three sectors, i.e., primary, secondary, and tertiary, to get the GDP of the economy.

    Step 4: Estimation of national income

    Finally, to determine the national income (NNPfc) from GDPMP,

    – Net factor income from abroad (NFIA) is added,

    – Depreciation is subtracted, and

    – Net indirect taxes are also deducted

    The formula is as follows:

    NNPFC = GDPMP – Depreciation + Net factor income from abroad – Indirect taxes + subsidies.
    2)Income method:The Income Method measures national income from the side of payments made to the primary factors of production in the form of rent, wages, interest and profit for their productive services in an accounting year. Thus, national income is calculated by adding up factor incomes generated by all the producing units located within the domestic economy during a period of account.

    The resulting total is called Domestic Income or Net Domestic Product at FC (NDPFC)- By adding net factor income from abroad to domestic income, we get National Income (NNPFC)- Mind, in income method national income is measured at the stage when factor incomes are paid out by enterprises to owners of factors of production—land, labour, capital and enterprise.

    Since net value added by an enterprise is the result of services of factors of production, therefore, the same is distributed in the form of money income (rent, wages, interest, etc.) among factors of production. Hence, value of national income method should be the same as the one calculated by value added method.

    Following are the main steps involved in estimating national income by income method:

    Identify enterprises which employ factors of production (land, labour, capital and enterprise).
    Classify factor payments into various categories like rent, wages, interest, profit and mixed income (or classify factor payments into compensation of employees, mixed income and operating surplus).
    Estimate amount of factor payments made by each enterprise.
    Sum up all factor payments made within domestic territory to get Domestic Income (NDP at FC).
    Estimate net factor income from abroad which is added to Domestic Income to derive National Income.
    Only factor incomes which are earned by rendering productive services are included. All types of transfer income like old-age pension, unemployment allowance, etc. are excluded.
    Sale and purchase of second-hand goods are excluded since they are not part of production of current year but commission paid on sale of second-hand goods is included as it is reward for rendering productive services. Likewise, sale proceeds of shares and bonds are not included.
    Imputed rent of owner occupied dwellings and value of production for self-consumption is included but value of self-consumed services like those of housewife is not Included.
    Income from illegal activities like smuggling, black-marketing, etc. as well as windfall gains (e.g., from lotteries) are excluded.
    Direct taxes such as income tax which are paid by the employees from their salaries and corporate tax, which is paid by the joint stock company from its profit, are included. But wealth tax and gift tax are excluded since they are deemed to be paid from past savings and wealth. Similarly, indirect taxes like sales tax, excise duties, which tend to increase market prices, are not included.
    3) Expenditure method:The expenditure method is a technique for measuring a country’s Gross Domestic Product (GDP) by incorporating imports, exports, investments, consumption, and government spending. The expenditure method can be regarded as the frequently used method to measure GDP.The formula is given as Y=C+I +G+(X-M) where c is consumption ,I is investment,G is government expenditure,X is exports and m is imports.
    The following are the four different kinds of aggregated expenses used to measure GDP:
    1. Consumer consumption
    About two-thirds of the GDP of the United States constitutes consumer spending. It includes all the costs incurred by the citizens of a country within the country’s borders or outside. For example, the costs incurred for foreign travel are included in consumer spending. However, it does not include the expenses that foreign visitors incur. Consumer spending can be categorized into the following:

    Purchasing perishable and non-perishable goods
    Procuring services

    2. Private investments
    Investments by businesses include capital expenditures on various assets. They can be categorized into the following:

    Gross fixed capital

    It consists of the costs incurred for the purchase of different fixed assets. Gross fixed capital can be divided further into two categories – gross business fixed investments, which include expenses incurred towards long-term assets, and gross residential construction investments, which include the expenses that businesses incur for constructing or purchasing residential units.

    Inventory investment

    The costs incurred by businesses for procuring raw materials and finished or unfinished goods are included as inventory investment. The category is performed on items that cannot be currently used for consumption. The opening and closing stock balances at each year-end are calculated to determine the inventory investment.

    3. Government spending
    Both state and federal governments of a country incur expenses for providing essential commodities, healthcare, infrastructure, education, and other necessities to its citizens.

    4. Net exports
    The difference in the value of a country’s total export and total import in one fiscal year is termed net exports. Exports are regarded as an economy’s output, while imports are regarded as expenses since they are produced outside the national boundaries of a country. A country’s total trade is measured by net exports and is also known as a balance of trade.

    Precautions Taken While Applying the Expenditure Method
    Since the production value of final goods is included, the expenses for any intermediate goods are not considered. Otherwise, a single expense will be counted twice, causing the national income to inflate inaccurately.
    The transfer payments do not add value to the economy of a nation; hence, they should not be included.
    The purchase of second-hand goods is not included since they do not affect the total value of produced goods and services. However, if the purchase of second-hand goods involves brokerage, the brokerage paid is included in the expense calculation.
    When assets such as bonds and shares are procured, it signifies a change in ownership and does not affect the value of goods and services; hence, the transactions are not involved in expense calculation. However, the brokerage paid for the transfer of shares is considered while using the expenditure method.
    Services provided by the government and non-profit organizations and the expenses incurred for the production of any good that is used for self-consumption are considered in the national income calculation.

  202. Name: okechukwu prosper onyedikachukwu
    Department: Business education
    Reg no: 2020/242139
    Assignment: methods of measuring national Income.

    The national Income of a country can be measured by three alternative methods,

    1. 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 refers to those good directly consumed and not used in further production process.

    2. Income method: in this method, the national Income is measured as a flow of factor incomes. There are generally four factors of production, labour, capital, land and entrepreneurship. Labour get wages and salaries, capital get interest, land get rent, entrepreneurship get profit as their remuneration.

    3. Expenditure method: in this method, national Income is measured as a flow of expenditure. GDP is sum total of private consumption expenditure. Government consumption expenditure, gross capital formation (consumption and private) and net exports (export – import).

  203. There are three methods to measure national income of an economy.
    These are:
    1) production method or value added method,
    2) income method, and
    3) expenditure method.
    Each of these methods corresponds to a flow taking place in the economy. These three methods are, in fact, three ways of looking at the same variable, national income. The statistical data and tools to measure national income by each of the three methods may be different but conceptually each of these will give the same result. If the different methods do not give us the same estimate of national income, it will be primarily because of lack of relevant statistical data required to measure national income.
    Production Method:
    Basically, three steps are involved in applying the production method to compute the national income of an economy. These steps are:
    1) to identify the producing enterprises and to classify them into industrial sectors according to their activities
    2) to estimate net value added at factor cost of each producing enterprise within the domestic territory of an economy and to add up net value added by all the sectors to arrive at net domestic product at factor cost
    3) to estimate net factor income from abroad, which has to be added to net domestic product at factor cost to arrive at net national product at factor cost/ national income of an economy.

    Income Method
    Net value added at factor cost of a producing unit is identical to the sum of factor incomes – compensation of employees and operating surplus or mixed income of the self-employed entrepreneurs. So, we can sum up compensation of employees and operating surplus or mixed income of the self-employed to estimate national increase. If factor incomes generated by all the producing units within the domestic territory of an economy are added up, net domestic product at factor cost is arrived at. Further, if net factor income from abroad is added to net domestic product at factor cost of an economy, net national product at factor cost or national income of an economy can be estimated.
    Given net national product at factor cost if the depreciation provision is added to it, gross national product at factor cost is arrived at. If net indirect taxes are added to gross national product at factor cost, gross national product at market price can be calculated.
    The main steps involved in estimating national income by the income method are:
    The classification of producing units that is adopted by the production method of estimating national income can be used for the income method also.
    The factor payments are generally classified into the following categories:
    a) Compensation of employees:
    1) to identify the producing enterprises, which use services of the factors of production to classify various types of factor payments
    to estimate various components of factor payments.
    2)to estimate net factor income from abroad, which has to be added to net domestic product at factor cost to arrive at net national product at factor cost or national income of an economy.

    b) Rent
    c) Interest
    d) Profits
    e) Mixed income of the self-employed

    Expenditure Method
    Income generated in the process of production is received by factors of production. Such income can be divided into two parts ;
    (a) income from work
    (b) income from ownership of capital and entrepreneurship.
    Incomes from work are enjoyed by the workers while those of ownership of entrepreneurship are enjoyed by their owners. The income earned by factors of production is either saving. Savings generated, in turn, are used for adding to the capital stock or what is called investment. If the final consumption and gross investment expenditure of all economic agents including the rest of the world are added up, this gives us the gross domestic product at market price for an economy. From the GDP at market price, we deduct depreciation provision and net indirect taxes to get net domestic product at factor cost. Add net factor income from abroad to net domestic product at factor cost to get net national product at factor cost (or national income) of an economy. Various components of final expenditures constituting gross domestic product at market price are:
    National Income Measurement
    1) private final consumption expenditure,Macroeconomic Aggregates
    2) government’s final consumption expenditure.
    3) gross domestic fixed capital formation,
    4) change in stock, and
    5) net export of goods and expenditure

    HIGHLIGHTS ON EACH OF THE METHODS:

    Production Method :
    .Net value added at factor cost
    of primary sector.
    . Net value added at factor cost of
    secondary sector .
    .Net value added at factor cost of tertiary sector
    .Net factor income from the rest of the world

    Income Method:
    . Compensation of employees.
    . Operating surplus.
    .Mixed income of the self-employed
    .Net factor income from the rest of the world

    Expenditure Method:
    . Private final consumptions Government
    final consumption expenditure.
    . Gross domestic fixed capital formation.
    . Change in stock
    . Minus net indirect taxes
    .Minus consumption of fixed capital.
    . Net exports of goods and services.
    . Net factor income from the rest of the world.

  204. Avatar Sunny Precious Ogochukwu says:

    Department: Combined social science ( Economic and philosophy)
    Faculty: Social science
    Reg number: 2020/245604
    Level: 100l
    Name: Sunny Precious Ogochukwu
    Course code: Eco 102
    Answer
    1.) Various method of measuring national income are
    * Production method or value added method
    * Income method
    * Expenditure method.
    * PRODUCT OR VALUE ADDED METHOD: National income is calculated using this method as a flow of goods and services. During a year, we determine the monetary value of all final goods that are consumed immediately rather than being employed in a subsequent manufacturing process. Because the value of intermediate product is already included in the value of final goods. The value of intermediate goods in national income are not counted otherwise the value of goods will be double-counted. To avoid duplicate counting, we can use the value addition approach, which calculate value addition (or, the value of the end good plus the value of intermediate goods).
    The sum total is the GDP at market price since the money value is measured at market price.
    The flow of goods and services is used to calculate national income.
    National income (NI) can be calculated as follows:
    GNP – cost of capital – depreciation – indirect taxes = National income
    * INCOME METHOD: National income is calculated using this method as a flow of factor income; labour, capital, land, and entrepreneurship are the four main components of production. Labour is compensated with wages and salaries, money is compensated with interest, the land is compensated with rent, and entrepreneurship is compensated with profit.
    Some self employed individual such as doctors, lawyers, and accountant use their own labour and capital. Their earning are classified as mixed – income. NDP at factor cost is the total of all factor income.
    National income can be calculated as: Employee compensation + operating surplus (W+R+P+I)+ Net income + net factor income from overseas =Net national income.
    * EXPENDITURE METHOD: National income is calculated using this method as a flow of expenditure. The gross domestic product (GDP) is the total of all private consumption expenditures. Government consumption expenditure , gross capital formation ( public and private) and net export are all factors to consider (Export – import).

  205. Avatar Attah kelechi Rita says:

    Attah kelechi Rita
    2020/242576
    kelechirita725@gmail.com.

    Trends in business and economic environment occur in many areas. These trend includes:

    1), E-commerce: The pandemic has accelerated a shift from brick and mortar stores to digital shopping.From groceries to clothing and other consumer goods, shopping entirely online with the option of home delivery or curbside pickup gives customers convenience and in increased peace of mind over personal safety.

    2), Sales promotion : Sales promotion has become an effective marketing tool that assist organization to wax stronger in a global competitive market.The purpose of sales promotion is to motivate the customer to immediately purchase a particular product thereby enhancing it’s sales volume.

    3), Global Reskilling Race: Unskilled and skilled workers shortage are becoming more prevalent.This is due to im migration policies and political trends. As a result, artificial intelligence, robotics, virtual reality and other technologies are starting to replace Unskilled labour loss. This can cause many jobs to collapse and business needs to reskill it’s workers amid this technology changes.

    4), Authenticity: Nowadays, consumers are seeking a for means to connect with brands and this need for connection has given rise to authenticity as a business trends in it’s own right. Authenticity helps to Foster human connection because as a human, we like to see brands and display important human qualities like honesty, reliability, empathy, compassion and even a bit of vulnerability and fear. We want brands to care about issues and stand for more than just turning a profit.

  206. Avatar Odu Gideon Odu says:

    Name: Ọdụ Gideon Odu
    Reg no:2020/242639
    Department: Economics
    Methods to measure national income.
    There are three methods to measure national income of an economy. These are
    1. Production method or value added method
    2. Income method
    3. Expenditure method
    Production method
    Basically, three steps are involved in applying the production method to compute the national income of an economy. These steps are
    1. To identify the producing enterprises and to classify them into industrial sectors according to their activities.
    2. To estimate net value added at factor cost of each producing enterprise within the domestic territory of an economy and to add up net value added by all the sector to arrive at net domestic product at factor cost.
    3. To estimate net factor income from abroad which has to be added to net domestic product at factor cost to arrive at net income of an economy.
    Income method
    Net value added at factor cost of producing unit is identical to the sum to factor incomes compensation of employees and operating surplus or mixed income of the self employed to estimate national increase. If factor incomes generated by all the producing unit within the domestic territory of an economy are added up, net domestic product at factor cost is arrived at. Further, if net domestic product at factor cost of an economy, net national product at factor cost or national income of an economy can be estimated.
    Expenditure method
    Income generated in the process of production is received by factors of production. Such income can be divided into two parts
    a). Income from work
    b). Income from ownership of capital and entrepreneurship. Income from work are enjoyed by the workers while those of ownership of entrepreneurship are enjoyed by their owners. The income earned by factors of production is either saving. Saving generated,in turn are used for adding to the capital stock or what is called investment. If the final consumption and gross investment expenditure of all economic agent including the rest of the world are added up, this gives up the gross domestic product at market price for an economy. From the GDP at market price, we deduct depreciation provision and net domestic product at factors cost. Add net factor income from abroad to get net national product at factor cost (or national income) of an economy.

  207. Avatar Attah kelechi Rita says:

    Attah kelechi Rita
    2020/242576
    kelechirita725@gmail.com

    National income can be defined as the total amount of income accruing to a country from economic activities at a given period of time. It includes payment made to all resources.
    WAYS OF MEASURING NATIONAL INCOME:
    There are three basic approach of measuring national income, the include the following:

    1), product method or value added method: This system is also known as output or inventory method. It measures national income by considering the total sum of the market value of all final goods and services produced in the production unit in an economy in a given period.
    This method classifies the economy into three major sector.
    a), Industrial sector e.g Agriculture industry, manufacturing, mining and processing etc.
    b), services sector. : In this sector the value of services of such professions like Doctor, soldier etc are taken by equating to their services.
    c), International transaction sector : In this sector, the value of goods exported and imported, payment from abroad are accounted.

    2), Income Approach: This is a method of computing national income that measures the income earned by all factors of production in producing final goods and services in a given period.

    3), Expenditure method : It is a method of computing national income that measures the amount spent on all final goods and services during a given period.
    Is computed mathematically as:
    GDP=C+I+G+(x_m).

  208. Avatar Orji David kenechukwu says:

    Name : Orji David kenechukwu
    E-mail : Orjid9881@mail.com
    Department : Economics
    Level : 100level
    Reg.no. : 2020/242635

    (1) list and explain deeply the various methods of measuring the national income.
    There are three methods of measuring the national income they include
    (A) Income method.
    (B) Product method.
    (C) Expenditure method.

    (a). Income method : In this method account is taken of all the income received by individuals , firms and the government within a year for their participation in production. The income received by factors of production in the form of wages or salaries, rent , interest and profits . Is added together . To avoid double counting , transfer incomes or payments are not included. Examples of transfer incomes are gifts given to old people, students and beggars ; pensions paid to old people etc. They are part of people’s income which are already counted . The income which is included must be that which arises from the production of goods and services. There must be something given out in return for a payment. Apart from not adding transfer payments, business expenses are excluded. However, goods and services consumed by producers are included.
    By using this approach, we arrive at either the G.N.P or G.D.P at factor cost. This is because the total figure is found by adding up the cost ( ie income ) of the various factors of production. To get the G.N.P or G.D.P at market prices, we add taxes and subtract subsidies.

    (b). Output or net product approach : This method sees national income in terms of the monetary value of all goods and services produced by the various economic units (individuals, firms and the government) in a year. In this method, national income is measured by adding together the value of the net contributions of the various sectors or enterprises (both private and public) in the country. To avoid double-counting, income is measured on a value-added basis. ( value added is the value of output, less cost of inputs). For example the cost of raw materials such as flour and sugar used in making bread must be subtracted from the value of bread to get the net contribution of bakeries to national output.
    In addition, the value of exports are included while the value of imports are subtracted. Also, the values of goods and services produced and consumed by the producers themselves are included.
    National income derived in this way gives the G.D.P at market prices. To get the G.D.P at factor cost, we subtract taxes and add subsidies.

    (C). Expenditure approach : This method of measuring national income measures the total expenditure on goods and services by individuals, firms and the government in a country. In using this approach, it is necessary to avoid double-counting by identifying expenditure ( consumption and investment) of a final nature. We include only expenditure on final goods and services. For example, in calculating the value of bread, which is a final consumption type of good, we shall take care not to add to the final price of bread the prices of flour, sugar, yeast and other ingredients used in making bread.
    In addition, transfer payments such as pensions paid to retired workers, gifts to beggars etc, are not included.

  209. Avatar Paul-Kayode Peniel Toluwase says:

    There are three ways of measuring the National Income of a country. They are from the income side, the output side and the expenditure side. Thus, we can classify these perspectives into the following methods of measurement of National Income.

    Methods of Measuring National Income

    Product Method

    Income Method

    Expenditure Method

    1. Product Method or Value Added or Output approach

    Under this method, we add the values of output produced or services rendered by the different sectors of the economy during the year in order to calculate the National Income.

    In this method, we include only the value added by each firm in the production process in the output figure.
    Hence, we use the value-added method. The value-added output of all the sectors of the economy is the GNP at factor cost. However, this method is unscientific as it adds the value of only those goods and services that are sold in the market or are available for sale in the market

    2. Income Method or Factor incomes approach

    Under this method, we add all the incomes from employment and ownership of assets before taxation received from all the production activities in an economy.

    Thus, it is also the Factor Income method. We also need to add the undistributed profits of the private sector and the trading surplus of the public sector corporations.

    However, we need to exclude items not arising from productive activities such as sickness benefits, interest on the national debt, etc.

    3. Expenditure Method

    This method measures the total domestic expenditure of the economy. It consists of two elements, viz. Consumption expenditure and Investment expenditure.

    Consumption expenditure includes consumption expenditure of the household sector on goods and services and consumption outlays of the business sector and public authorities.

    Investment expenditure refers to the expenditure on the making of fixed capital such as Plant and Machinery, buildings, etc.

    Name: Paul-Kayode Peniel Toluwase
    Reg number: 2020/246585
    Department: Sociology and anthropology

  210. Avatar Paul-Kayode Peniel Toluwase says:

    There are three ways of measuring the National Income of a country. They are from the income side, the output side and the expenditure side. Thus, we can classify these perspectives into the following methods of measurement of National Income.

    Methods of Measuring National Income

    Product Method

    Income Method

    Expenditure Method

    1. Product Method or Value Added or Output approach

    Under this method, we add the values of output produced or services rendered by the different sectors of the economy during the year in order to calculate the National Income.

    In this method, we include only the value added by each firm in the production process in the output figure.
    Hence, we use the value-added method. The value-added output of all the sectors of the economy is the GNP at factor cost. However, this method is unscientific as it adds the value of only those goods and services that are sold in the market or are available for sale in the market

    2. Income Method or Factor incomes approach

    Under this method, we add all the incomes from employment and ownership of assets before taxation received from all the production activities in an economy.

    Thus, it is also the Factor Income method. We also need to add the undistributed profits of the private sector and the trading surplus of the public sector corporations.

    However, we need to exclude items not arising from productive activities such as sickness benefits, interest on the national debt, etc.

    3. Expenditure Method

    This method measures the total domestic expenditure of the economy. It consists of two elements, viz. Consumption expenditure and Investment expenditure.

    Consumption expenditure includes consumption expenditure of the household sector on goods and services and consumption outlays of the business sector and public authorities.

    Investment expenditure refers to the expenditure on the making of fixed capital such as Plant and Machinery, buildings, etc.

  211. 1) Various method of measuring the national income:
    a) product method
    b) income method
    c) Expenditure method
    d) Value added method
    2) Explanation of the method listed above;

    a) product method:this involves the total value of final goods and services produced in a country during a year is calculated at market price.
    However to find out the GNP the data of all productive activities such as agricultural products, minerals from mines, commodities produced by industries e t c are collected and assessed at market prices. only the final goods and services are included and the intermediary goods and services are left out.

    b) income method:In this method net income that accrue to all factors of production by way of net rent, net wages,net interest and net profits are all added together but incomes received in the form of transfer payments are not included in it.The data pertaining to income are obtained from different sources , for instance from income tax department in respect of high income groups and in case of workers from their wage bills
    c)expediture method: this method involves the measurements of total expenditure incurred by the society in a particular year is added together and includes government expenditure on goods and services, net foreign investment,net domestic investment e t c.this concept is based on the assumption that national income equals national expenditure.

    d) Value method: this involves the difference between the value of material outputs and inputs at each stage of production is the value added.if such differences are added up for all industries in the economy, we arrive at the gross domestic product.

  212. Avatar Ugwuanyi Nnaemeka Jude REG NO. 2020/247921 says:

    Three Important Methods for Measuring National Income. There are three techniques to compute national income:
    Income Method
    product/ Value Added Method
    Expenditure Method
    1. Income Method: National income is calculated using this method as a flow of factor incomes. Labor, capital, land, and entrepreneurship are the four main components of production. Labour is compensated with wages and salaries, money is compensated with interest, the land is compensated with rent, and entrepreneurship is compensated with profit.Furthermore, certain self-employed individuals, such as doctors, lawyers, and accountants, use their own labour and capital. Their earnings are classified as mixed-income.
    2. 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 process.Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.
    3. Expenditure Method: Factor income earned by factors of production is spent in the form of expenditure on purchase of goods and services produced by firms.
    This method measures national income as sum total of final expenditures incurred by households, business firms, government and foreigners.
    This total final expenditure is equal to gross domestic product at market price, i.e. ∑Final Expenditure = GDPMP.
    This method is also known as ‘Income Disposal Method’.

  213. Avatar Udensi Martha Chioma .......2020/248965 says:

    The methods of measuring national income are :
    1) Income method
    2) Product methiod
    3) Expenditure method

    1. Income method:
    In the income method, the national income is measured by adding up the pretax income generated by the individuals and companies in the economy. It consists of income from wages, rent of buildings and land, interest on capital, profits, etc. in an accounting year. The income method shows the national income distribution among different earning groups in the economy.

    2. Product method:
    The product method also known as the value-added method is based on the net value added to the product at every stage of production. In the product method, the economy is usually divided into different industry sectors, such as fishing, agriculture, and transport.
    The national income is calculated by adding the total output of the companies in the economy. The method shows the contribution of each sector to the national income, hence demonstrating the importance of different sectors relative to each other.

    3. Expenditure method:
    In the expenditure method, the national income is measured by adding up the expenditures made by individuals, companies, and the government. Thus, it combines consumer spending, investments made by companies, net exports, and government spending to calculate the national income.

  214. Avatar CHUKWU BRIDGET OLACHINYERE says:

    NAME: CHUKWU BRIDGET OLACHINYERE
    REG NO: 2020/248249
    COURSE: ECO 102
    DEPARTMENT: ECONOMICS
    The national income of a country can be measured by three alternative methods namely;
    1). Product method
    2). The income method
    3). The expenditure method
    1). PRODUCT METHOD: In this method, national income is measured as a flow if goods and services. We calculate money value of all final goods and services produced in an economy during a year. Finish here refer to those goods which are directly consumed and not used in further production process.
    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise, there will be double counting of value of goods
    2).THE INCOME METHOD: In a nation that produces GDP during a year, people earn income from their jobs. Thus the sum of all factor incomes is GDP by revenue method: wages and salaries (employee compensation) + rent + interest + benefit.
    3). THE EXPENDITURE METHOD: In this method, national income is measured as a flow of expenditure. GDP is sum–total of consumption expenditure, government consumption, gross capital formation ( Government and Private ) and net exports ( Export — Import ).

  215. Avatar Ugwuanyi+Perpetual+Amarachi says:

    There are four methods of measuring national income:
    1. Product Method
    2. Income Method
    3. Expenditure Method
    4. Value Added Method

    1. Product Method: The total values final goods and services produced in a country during a year is calculated at market prices. To find out the GNP, the data of all productive activities,such as agricultural products,wood received from forests, minerals received from the mines, commodities produced by industries, the contributions to production made by transport, communications, insurance companies, lawyers, doctors, teachers etc are collected and assessed at market prices. Only the final goods and services are included anf the intermediary goods and services are left out.
    2. Income Method: The net income payments received by all citizens of a country in a particular year are added up or net incomes that accrue to all factors of production by way of net rents, net wages,net interest and net profits are all added together but incomes received in the form of transfer payments are npt included in it. The data pertaining to income are obtained from different sources for instance, from income tax department in respect of high income group and in case of workers from their wage bills.
    3. Expenditure Method: Here, the total expenditure incurred by the society in a particular year is added together and includes personal concumption expenditure, net domestic investment, government expenditures on goodsand services and net foreign investment. This method is based on the assumption that national income equals national expenditure.
    4. Value Added Method: This method of measuring national income is the value Added by industries. The difference between the value of material outputs and inputs at each stage of production is the value added. If all such differences are added up for all industries in the economy we o the gross domestic product.

  216. Avatar OKorafor+Chinonyerem+Mgbo says:

    NAME: OKORAFOR CHINONYEREM MGBO
    MATRIC NUMBER:2020/242636
    DEPARTMENT: ECONOMICS
    COURSE CODE: ECO 102
    COURSE TITLE: PRINCIPLES OF ECONOMICS

    Methods of Measuring National Income:
    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. Namely:

    1. Production or value added method
    2. Income method or factor earning method
    3. Expenditure method

    And if these methods are done correctly, the following equation must hold
    Output = Income = Expenditure.
    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.

    1. Product Method:
    Product method measures the output of the country. It is also called inventory method. Under this method, the gross value of output from different sectors like agriculture, industry, trade and commerce, etc., is obtained for the entire economy during a year. The value obtained is actually the GNP at market prices. Care must be taken to avoid double counting.
    The value of the final product is derived by the summation of all the values added in the productive process. To avoid double counting, either the value of the final output should be taken into the estimate of GNP or the sum of values added should be taken.

    Precautions
    The product method is followed in the underdeveloped countries, but it is less reliable because the margin of error in this method is large:
    1. Double counting is to be avoided under value added method. Any commodity which is either raw material or intermediate good for the final production should not be included. For example, value of cotton enters value of yarn as cost, and value of yarn in cloth and that of cloth in garments. At every stage value added only should be calculated.
    2. The value of output used for self consumption should be counted while measuring national income.
    3. In the case of durable goods, sale and purchase of second hand goods (for example pre owned cars) should not be included.

    2. Income Method (Factor Earning Method)
    This method approaches national income from the distribution side. Under this method, national income is calculated by adding up all the incomes generated in the course of producing national product.
    Steps involved:
    1. The enterprises are classified into various industrial groups.

    2. Factor incomes are grouped under labour income, capital income and mixed income.
    a. Labour income – Wages and salaries, fringe benefits, employer’s contribution to social security.
    b. Capital income – Profit, interest, dividend and royalty
    c. Mixed income – Farming, sole proprietorship and other professions.

    3. National income is calculated as domestic factor income plus net factor incomes from abroad.

    In short,
    Y = w + r + i + p + (X-M)
    w = wages, r = rent, i = interest, p = profits,
    X = Exports and M = Imports
    This method is adopted for estimating the contributions of the remaining sectors, viz., small enterprises, banking and insurance, commerce and transport, professions, liberal arts and domestic service, public authorities, house property and foreign sector transaction.
    Data on income from abroad (the rest of the world sector or foreign sector) are obtained from the account of the balance of payments of the country.

    Precautions
    While estimating national income through income method, the following precautions should be taken.

    Items not to be included
    1. Transfer payments are not to be included in estimation of national income as these payments are not received for any services provided in the current year such as pension, social insurance etc.
    2. The receipts from the sale of second hand goods should not be treated as part of national income as they do not create new flow of goods or services in the current year.
    3. Windfall gains such as lotteries are also not to be included as they do not represent receipts from any current productive activity.
    4. Corporate profit tax should not be separately included as it has been already included as a part of company profit.

    Items to be included
    1. Imputed value of rent for self occupied houses or offices is to be included.
    2. Imputed value of services provided by owners of production units (family labour) is to be included.

    3. The Expenditure Method (Outlay method):
    Under this method, the total expenditure incurred by the society in a particular year is added together. To calculate the expenditure of a society, it includes personal consumption expenditure, net domestic investment, government expenditure on consumption as well as capital goods and net exports. Symbolically,

    GNP = C + I + G + (X-M)
    C = Private consumption expenditure
    I = Private Investment Expenditure
    G = Government expenditure
    X-M = Net exports

    Precautions
    1. Second hand goods: The expenditure made on second hand goods should not be included.
    2. Purchase of shares and bonds : Expenditures on purchase of old shares and bonds in the secondary market should not be included.
    3. Transfer payments : Expenditures towards payment incurred by the government like old age pension should not be included.
    4. Expenditure on intermediate goods : Expenditure on seeds and fertilizers by farmers, cotton and yarn by textile industries are not to be included to avoid double counting. That is only expenditure on final products are to be included.

  217. Avatar OVWIGHO JOSEPH ODEYOVWI (2020/250321) says:

    METHODS OF MEASURING NATIONAL INCOME

    1. Income Approach (Income method): In using this method, account is taken of all the income received by individuals, firms, and the government within a year for their participation in production. The income received by the factors of production in the form of wages or salaries, rent, interest and profits is added together. To avoid double counting, transfer incomes or payments are not Included. By using this approach, we arrive at either the G.N.P or G.D.P at factor cost. This is because the total figure is found by adding up the costs of the various factors of production.

    2. Output or Net Product Approach: This methods sees national income in terms of the monetary value of all goods and services produced by the various economic units (individuals, firms and the government) in a year. In this method, national income is measured by adding together the value of the net contributions of the various sectors or enterprises (both private and public) in the country. To avoid double counting, income is measured on a value added basis. (Value added is the value of output less cost of inputs). In addition, the value of exports are included while the value of imports are subtracted. National Income derived in this way gives the G.D.P at market prices. To get the G.D.P at factor cost, we subtract taxes and add subsidies.

    3. Expenditure Approach: This method of measuring national income measures the total expenditure on goods and services by the various economic units In a country. In using this approach, it is necessary to avoid double counting by identifying expenditures of a final nature. We include only expenditure on final goods and services. For example, in calculating the value of bread, which is a final consumption type of good, we shall take care not to add to the final price of the bread the prices of flour, sugar, yeast and other ingredients used in making bread. In addition, transfer payments such as pensions paid to retired workers, gifts to beggars etc, are not included. The formula used for calculating national income using this approach is: Y= C + I + G + (X – M) + P. The use of this approach is based on the fact that all goods and services produced In a country can be considered as either final consumption or investment goods and services.

  218. Avatar OVWIGHO JOSEPH ODEYOVWI (2020/250321) says:

    METHODS OF MEASURING NATIONAL INCOME

    1. Income Approach (Income method): In using this method, account is taken of all the income received by individuals, firms, and the government within a year for their participation in production. The income received by the factors of production in the form of wages or salaries, rent, interest and profits is added together. To avoid double counting, transfer incomes or payments are not Included.
    By using this approach, we arrive at either the G.N.P or G.D.P at factor cost. This is because the total figure is found by adding up the costs of the various factors of production.

    2. Output or Net Product Approach: This methods sees national income in terms of the monetary value of all goods and services produced by the various economic units (individuals, firms and the government) in a year. In this method, national income is measured by adding together the value of the net contributions of the various sectors or enterprises (both private and public) in the country. To avoid double counting, income is measured on a value added basis. (Value added is the value of output less cost of inputs). In addition, the value of exports are included while the value of imports are subtracted. National Income derived in this way gives the G.D.P at market prices. To get the G.D.P at factor cost, we subtract taxes and add subsidies.

    3. Expenditure Approach: This method of measuring national income measures the total expenditure on goods and services by the various economic units In a country. In using this approach, it is necessary to avoid double counting by identifying expenditures of a final nature. We include only expenditure on final goods and services. For example, in calculating the value of bread, which is a final consumption type of good, we shall take care not to add to the final price of the bread the prices of flour, sugar, yeast and other ingredients used in making bread.
    In addition, transfer payments such as pensions paid to retired workers, gifts to beggars etc, are not included. The formula used for calculating national income using this approach is:
    Y= C + I + G + (X – M) + P.
    The use of this approach is based on the fact that all goods and services produced In a country can be considered as either final consumption or investment goods and services.

  219. Avatar Charles Thank God Ekenedilichukwu says:

    Eco 102 ( online quiz ) .
    Reg : 2020/242137
    Name : Charles Thank God Ekenedilichukwu .
    Dept : Business Education.
    Faculty : VTE
    Email : charlesthankgod71@gmail.com.

    The three different ways of measuring ( GDP) national income are :.
    (1) product method.
    (2) income method.
    (3). And expenditure method.
    These three methods of calculating GDP methods yield the same result because national product= national income = national expenditure .
    (1) product method : in this method , all goods and services produced during the year in various industries are added up . This is also known as value added to GDP . In some developed country includes the following items : product and services like agriculture and allied services etc . It is , in other words , the amount of the added gross value .

    (2). The income method : in a nation that produces GDP during a year , people earn income from there jobs . Thus the sum of all factor incomes is GDP by revenue method : wages and salaries ( employee compensation ) + rent + interest + benefit .

    (3) Expenditure method : this approach focuses on products and services generated during one year within the region or nation .
    GDP is subtracted from the portion of consumption , investment , and government spending expended on imports . Likewise, all manufactured components , such as raw materials used in the manufactured of products for sale are also exempt . Thus GDP by expenditure method at market prices is net exports, which can be positive or negative .

  220. Avatar OGBU PERPETUA CHINAEMEREM says:

    Methods of measuring national income
    1) Gross Domestic Product(GDP): Dernberg defines GDP at market price as the market value of the output of final goods and services produced in the domestic territory of a country during an accounting year.
    Three different ways of measuring GDP are; Product method, Income method and Expenditure method
    2) National Domestic Product (NDP): This is the value of net output of the economy during the year. Thus, NDP= GDP at factor cost – Depreciation.
    3) Gross National Product (GNP): This is the measure of the flow of goods and services at market value resulting from current production during a year in a country, including net income from abroad
    4) Personal Income: This is the total income received by the individual of a country from all sources before payment of direct taxes in one year. Thus; Personal Income= Private income- undistributed corporate profit- profit taxes.
    5) Disposable Income: This is the actual income which can be spent in consumption by individuals and families. Thus; Direct Income= Personal Income- direct taxes.

  221. Avatar OZOR PAMELLA CHISOM says:

    OZOR PAMELLA CHISOM
    EDUCATION ECONOMICS
    REG:2020/247089
    VARIOUS WAYS OR METHODS OF MEASURING NATIONAL INCOME

    1: Gross Domestic Products (GDP): it is a measure used to evaluate the health of a county’s economy,it provides simple estimate of the economy’s output for the time period,normal GDP measures the money value of output while real GDP is a measure of the physical value of output

    2: National Net Product (NNP): it is a tool generally used by the economist to report on the growth and strength of a Nation_state and is the total value of finished goods and services produced by a country’s citizen overseas and domestically.

    3: Gross National Product: this is the value of all products and service produced by the citizens of a country both domestically and internationally minus the manufacturing of tangible goods such as vehicles, agricultural products machinery.

    4: Personal Income: this is the amount of money collectively received by the citizen residing in a country, their sources are money earned from dividends, distributions,from employment and investment.

    5: Disposable Income: is the money you have left from your income after payment of taxes,it is also the amount of money you have for spending and saving after you pay your income taxes .
    Calculation of Disposable income
    Disposable income=personal income – personal current taxes.

  222. Avatar OKWUDILI ESTHER MMESOMA says:

    Okwudili Esther Mmesoma
    2020/242613
    Economics Department

    METHODS OF MEASURING NATIONAL INCOME
    1) Product method
    2) Income method
    3) Expenditure method

    1). PRODUCT METHOD
    In this method, all goods and services produced during the year in various industries are added up. This is also known as value-added to GDP or GDP at the sector of origin’s cost factor. Product method measures the output of the country. It is also called inventory method. Under this method, the gross value of output from different sectors like agriculture, industry, trade and commerce, etc., is obtained for the entire economy during a year. The value obtained is actually the GNP at market prices. Care must be taken to avoid double counting.
    The value of the final product is derived by the summation of all the values added in the productive process. To avoid double counting, either the value of the final output should be taken into the estimate of GNP or the sum of values added should be taken.

    2) INCOME METHOD
    In a nation that produces GDP during a year, people earn income from their jobs. Thus the sum of all factor incomes is GDP by revenue method: wages and salaries (employee compensation) + rent + interest + benefit. This method approaches national income from the distribution side. Under this method, national income is calculated by adding up all the incomes generated in the course of producing national product.
    Steps involved
    A. The enterprises are classified into various industrial groups.
    B. Factor incomes are grouped under labour income, capital income and mixed income.
    i. Labour income – Wages and salaries, fringe benefits, employer’s contribution to social security.
    ii. Capital income – Profit, interest, dividend and royalty
    iii. Mixed income – Farming, sole proprietorship and other professions.
    C. National income is calculated as domestic factor income plus net factor incomes from abroad. In short.
    This method is adopted for estimating the contributions of the remaining sectors, viz., small enterprises, banking and insurance, commerce and transport, professions, liberal arts and domestic service, public authorities, house property and foreign sector transaction.
    Data on income from abroad (the rest of the world sector or foreign sector) are obtained from the account of the balance of payments of the country.

    3) EXPENDITURE METHOD
    This approach focuses on products and services generated during one year within the region.
    GDP is subtracted from the portion of consumption, investment, and government spending expended on imports. Likewise, all manufactured components, such as raw materials used in the manufacture of products for sale, are also exempt.
    Thus GDP by expenditure method at market prices is net export, which can be positive or negative.
    Under this method, the total expenditure incurred by the society in a particular year is added together. To calculate the expenditure of a society, it includes personal consumption expenditure, net domestic investment, government expenditure on consumption as well as capital goods and net exports. Symbolically,
    GNP = C + I + G + (X-M)
    C – Private consumption expenditure
    I – Private Investment Expenditure
    G – Government expenditure
    X – Export
    M – Import
    X-M = Net exports.

  223. Avatar Adeleye+Samuel+tolani,+reg no: 2020/247714+(philosophy+department) says:

    National income can be seen as the monetary value over a period of time f the output flows of goods and services produced in an economy.
    The total value of output in an economy is the gross domestic product GDP and is used to measure economic activity changes and there are three major ways of measuring.
    1, The expenditure method
    2, the income method
    3, the product method.

    The expenditure method
    This approach focuses in product and services generated during one year within the region and it is calculated substituted from the portion of consumption, investment and government spending expended on imports. Expenditure method is the most commonly way to estimate GDP…according to research.
    It speculates that everything that the private sector including consumers and private firms and government spend within the borders of a particular country, must add up to the total value of all finished good and services produced over a certain period of time. This method produces national GDP, which must then be adjusted for inflation to result in the real GDP. In this method aggregate demand is equivalent to expenditure equation for GDP in the long run.

    Income method
    In a nation that produces GDP during a year which earn her income from their jobs, the sum of all factors income is GDP by revenue method , wages and salaries( employees remunerations)+_rent +interest +benefit.

    The product method
    In this method , all goods and services produced during the year in various industries are added up. This is also known as value added GDP. India for instance is a country that makes use of this method to approach national income
    In this method ,national income is measured as a flow of goods and services. It’s calculate the money value of all final good and services produced in an economy during a year. Final goods here refer to these goods which are directly consumed and not used in further production process. This system is also known as the output and inventory method

  224. Avatar Nsude Onyinyechi Gift says:

    Name: Nsude Onyinyechi Gift
    Reg No:2020/245128
    Gross Domestic Product (GDP):
    GDP is the total value of goods and services produced within the country during a year. This is calculated at market prices and is known as GDP at market prices. Dernberg defines GDP at market price as “the market value of the output of final goods and services produced in the domestic territory of a country during an accounting year.”
    There are three different ways to measure GDP:
    Product Method, Income Method and Expenditure Method.
    These three methods of calculating GDP yield the same result because National Product = National Income = National Expenditure.
    1. The Product Method:
    In this method, the value of all goods and services produced in different industries during the year is added up. This is also known as the value added method to GDP or GDP at factor cost by industry of origin. The following items are included in India in this: agriculture and allied services; mining; manufacturing, construction, electricity, gas and water supply; transport, communication and trade; banking and insurance, real estates and ownership of dwellings and business services; and public administration and defense and other services (or government services). In other words, it is the sum of gross value added.
    2. The Income Method:
    The people of a country who produce GDP during a year receive incomes from their work. Thus GDP by income method is the sum of all factor incomes: Wages and Salaries (compensation of employees) + Rent + Interest + Profit.
    3. Expenditure Method:
    This method focuses on goods and services produced within the country during one year.
    GDP by expenditure method includes:
    (1) Consumer expenditure on services and durable and non-durable goods (C),
    (2) Investment in fixed capital such as residential and non-residential building, machinery, and inventories (I),
    (3) Government expenditure on final goods and services (G),
    (4) Export of goods and services produced by the people of country (X),
    (5) Less imports (M). That part of consumption, investment and government expenditure which is spent on imports is subtracted from GDP. Similarly, any imported component, such as raw materials, which is used in the manufacture of export goods, is also excluded.
    Thus GDP by expenditure method at market prices = C+ I + G + (X – M), where (X-M) is net export which can be positive or negative.
    (B) GDP at Factor Cost:
    GDP at factor cost is the sum of net value added by all producers within the country. Since the net value added gets distributed as income to the owners of factors of production, GDP is the sum of domestic factor incomes and fixed capital consumption (or depreciation).
    Thus GDP at Factor Cost = Net value added + Depreciation.
    GDP at factor cost includes:
    (i) Compensation of employees i.e., wages, salaries, etc.
    (ii) Operating surplus which is the business profit of both incorporated and unincorporated firms. [Operating Surplus = Gross Value Added at Factor Cost—Compensation of Employees—Depreciation]
    (iii) Mixed Income of Self- employed.
    Conceptually, GDP at factor cost and GDP at market price must be identical/This is because the factor cost (payments to factors) of producing goods must equal the final value of goods and services at market prices. However, the market value of goods and services is different from the earnings of the factors of production.
    In GDP at market price are included indirect taxes and are excluded subsidies by the government. Therefore, in order to arrive at GDP at factor cost, indirect taxes are subtracted and subsidies are added to GDP at market price.
    Thus, GDP at Factor Cost = GDP at Market Price – Indirect Taxes + Subsidies.
    (C) Net Domestic Product (NDP):
    NDP is the value of net output of the economy during the year. Some of the country’s capital equipment wears out or becomes obsolete each year during the production process. The value of this capital consumption is some percentage of gross investment which is deducted from GDP. Thus Net Domestic Product = GDP at Factor Cost – Depreciation.
    (D) Nominal and Real GDP:
    When GDP is measured on the basis of current price, it is called GDP at current prices or nominal GDP. On the other hand, when GDP is calculated on the basis of fixed prices in some year, it is called GDP at constant prices or real GDP.
    Nominal GDP is the value of goods and services produced in a year and measured in terms of rupees (money) at current (market) prices. In comparing one year with another, we are faced with the problem that the rupee is not a stable measure of purchasing power. GDP may rise a great deal in a year, not because the economy has been growing rapidly but because of rise in prices (or inflation).
    On the contrary, GDP may increase as a result of fall in prices in a year but actually it may be less as compared to the last year. In both 5 cases, GDP does not show the real state of the economy. To rectify the underestimation and overestimation of GDP, we need a measure that adjusts for rising and falling prices.
    This can be done by measuring GDP at constant prices which is called real GDP. To find out the real GDP, a base year is chosen when the general price level is normal, i.e., it is neither too high nor too low. The prices are set to 100 (or 1) in the base year.
    Now the general price level of the year for which real GDP is to be calculated is related to the base year on the basis of the following formula which is called the deflator index:

    Suppose 1990-91 is the base year and GDP for 1999-2000 is Rs. 6, 00,000 crores and the price index for this year is 300.
    Thus, Real GDP for 1999-2000 = Rs. 6, 00,000 x 100/300 = Rs. 2, 00,000 crores
    (E) GDP Deflator:
    GDP deflator is an index of price changes of goods and services included in GDP. It is a price index which is calculated by dividing the nominal GDP in a given year by the real GDP for the same year and multiplying it by 100. Thus,

    It shows that at constant prices (1993-94), GDP in 1997-98 increased by 135.9% due to inflation (or rise in prices) from Rs. 1049.2 thousand crores in 1993-94 to Rs. 1426.7 thousand crores in 1997-98.
    (F) Gross National Product (GNP):
    GNP is the total measure of the flow of goods and services at market value resulting from current production during a year in a country, including net income from abroad.

  225. Avatar Onuta+Precious+Irueru-oghene says:

    Name: Onuta Precious Irueru-oghene
    Reg no: 2020/245275
    Email: irueruoghene13@gmail.com

    The various methods of measuring National Income are listed below:
    1. Product Method
    2. Income Method
    3. Expenditure Method

    Further explained:
    1. Product Method:
    This method measures the output of a country. It is also known as the “Inventory method”. Sectors like agriculture, industry, trade and commerce obtain their gross value of output for the entire company during a yearly period. The value gotten is the GNP( gross national product) at market prices. While sectors like animal husbandry, forestry, fishery and mining obtain their gross value of output by multiplying their estimates of total production with market prices.
    The Net value of output is gotten by deducting the cost of materials used in production and depreciation allowed from the gross value of output. When measured this way, the net contribution of each sector to the national income is shown.

    2. Income method:
    This method calculates national income by adding up incomes generated during the production of national products. In this method the enterprises are classified into various industrial groups. The factor incomes are grouped under labour, capital and mixed income. Labour income consists of wages and salaries, employers contribution, while the Capital income consists of profit, interest, dividend and royalties . Mixed income on the other hand consists of farming, sole proprietorship and other professions.

    National income is calculated as:
    Y = w + r + i + π + (R-P)
    Where ,
    w- wages
    r- rent
    I- interests
    π- profits

    The above is simply the domestic factor income added to the net factor income from abroad.

    In this method, we estimate the contributions of the other sectors, small enterprises, banking and insurance, commerce and transport, professions, liberal arts and domestic service, public authorities, house property and foreign sector transaction.
    Data on income from abroad (the rest of the world sector or foreign sector) are obtained from the account of the balance of payments of the country.
    3. Expenditure method:
    For this method, the total expenditure incurred by the society in a particular year is summed up.
    To calculate the expenditure of a society, it’ll consist of personal consumption expenditure, net domestic investment, government expenditure on consumption as well as capital goods and net exports.
    Formula,
    GNP = C + I + G + (X-M)
    C – Private consumption expenditure 
    I – Private Investment Expenditure 
    G – Government expenditure
    X-M = Net exports

  226. 1. Product Method:
    ADVERTISEMENTS:
    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 process.
    Goods which are further used in production process are called intermediate goods. In the value of final goods, value of intermediate goods is already included therefore we do not count value of intermediate goods in national income otherwise there will be double counting of value of goods.
    To avoid the problem of double counting we can use the value-addition method in which not the whole value of a commodity but value-addition (i.e. value of final good value of intermediate good) at each stage of production is calculated and these are summed up to arrive at GDP.
    ADVERTISEMENTS:
    The money value is calculated at market prices so sum-total is the GDP at market prices. GDP at market price can be converted into by methods discussed earlier.
    2. Income Method:
    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.
    ADVERTISEMENTS:
    3. Expenditure Method:
    In this method, national income is measured as a flow of expenditure. GDP is sum-total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

  227. Avatar ABONYI BLESSING CHINASA says:

    Name :Abonyi Blessing chinasa
    Dept: Philosophy
    Reg no. 2020/243112
    Email :Blessingchi156@gmaile com

    Methods of measuring the national income
    There are three methods to measure national income of an economy. These are
    (1)Product method
    Under this method, we add the values of output produced or services rendered by the different sectors of the economy during the year in order to calculate the national income. In this methods we include only the value added by each firm in the production process in the output figure

    (2)Income method
    Under this method, we add all the incomes from employment and ownership of assets before taxation received from all the production activities in an economy.
    (3)Expenditure method :This method measures the total domestic expenditure of the economy, it consist of two element via consumption expenditure and lnvestment expenditure.

  228. Avatar MUOKEBE CHIAMAKA FAITH says:

    Name: MUOKEBE CHIAMAKA
    Reg no: 2020/244660
    Dept:EDUCATION AND ECONOMICS
    E-mail: faithc643@gmail.Com

    Meaning of national income
    NATIONAL INCOME
    National income can be defined as the monetary aggregate of the current achievements of an economy, without any double counting. It is estimated, usually for one year. Therefore, it is net monetary value of all the goods and servicesproduced by the constituents of a national economy over a period of one year.
    The measurement of production, income and expenditure flows with respect the normal residents of an economy gives us three methods of measuring national income of an economy.

    Methods to Measure National Income
    There are three methods to measure national income of an economy. These are:
    1) production method or value added method,
    2) income method, and
    3) expenditure method.
    Each of these methods corresponds to a flow taking place in the economy. These three methods are, in fact, three ways of looking at the same variable, nationa lincome. The statistical data and tools to measure national income by each of the three methods may be different but conceptually each of these will give the same result. If the different methods do not give us the same estimate of national income, it will be primarily because of lack of relevant statistical data required to measurenational income.

    1.PRODUCTION 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 process.
    Basically, three steps are involved in applying the production method to compute the national income of an economy. These steps are:
    1) to identify the producing enterprises and to classify them into industrial sectors according to their activities
    2) to estimate net value added at factor cost of each producing enterprise within the domestic territory of an economy and to add up net value added by all the sectors to arrive at net domestic product at factor cost
    3) to estimate net factor income from abroad, which has to be added to net domestic product at factor cost to arrive at net national product at factor cost/national income of an economy.
    Classification of Industrial sectors
    Broadly speaking, the industrial sectors are divided into three categories:

    a) Primary Sector,
    b) Secondary Sector, and
    c) Tertiary or Services Sector.
    Primary Sector: It includes agriculture and allied activities of forestry, fishing,mining and quarrying. This sector produces commodities by exploiting natural resources like coal, iron ore and other minerals. The primary sector is divided into: (i) agriculture, (ii) forestry and logging, (iii) fishing, and (iv) mining and quarrying.
    Secondary Sector: It consists of the manufacturing sector. In India, the secondary sector is divided into: (i) registered manufacturing, (ii) unregistered manufacturing, (iii) construction, (iv) electricity, gas and water supply.
    Tertiary Sector: It consists of the services. this sector comprises: (i) railways, (ii) transport by other means and storage, (iii) communications, (iv) trade,hotels and restaurants, (v) banking and insurance, (vi) real estate, ownership of dwellings and business services, (vii) public administration and defence and (viii) other services.

    Estimation of Net Value Added

    After the producing sectors of an economy are identified, the next step is to find out net value added of each of these sectors. The term value added refers to addition of value by a producing unit to raw materials and services (known as intermediate inputs) used in production. What a producer produces is termed as the output. Value added is the difference between the value of output and the cost of intermediate inputs.
    It is also important to note that :
    i) sum of gross value added at market price of all producing units gives us gross domestic product at market price;
    ii) sum of gross value added at factor cost of all producing units gives us gross domestic product at factor cost;
    iii) net domestic product at factor cost is estimated by adding net value added atfactor cost of all the producing units of an economy; and finally,
    iv) net domestic product at market price is computed by summing up net value added at market price of all the producing units of an economy.

    Net Factor Income from Abroad
    The concept of net factor income from abroad has to be added to net domesticproduct at factor cost for getting the national income. It consists of
    1) net compensation of employees,
    2) net income from property and entrepreneurship, and
    3) net retained earnings of resident companies abroad.

    Net Compensation of Employees from Abroad
    Net compensation of employees receivable from abroad is equal to the difference between compensation of employees received by resident employees who are living or employed abroad temporarily and compensation of foreign nationals working temporarily in the domestic economy. The clause temporary resident applies to those employees who stay abroad for less than one year. In case they stay for one year or more in a foreign country they would be treated as normal residents of that country and their income would be a part of the national income of the employer country. In such a situation, whatever remittances they send to their country would be treated as current transfers from abroad and will not form a part of the national income. Net compensation of employees, as it is defined, can be a positive or anegative value.

    Net Income from Property and Entrepreneurship from Abroad
    Net income from property and Entrepreneurship from abroad is the difference between the income received by way of interest, rent, dividend and profit by the resident producers of a country and payments of similar type made to the rest of the world. This also includes net interest received by the government on foreign loans.

    Net Retained Earnings of Resident Companies Abroad
    Retained earning refers to the undistributed profit of the companies. Residents companies abroad (i.e., companies belonging to one country and working in the domestic territory of some other country) retain a part of their profits for further
    investment abroad. Likewise, foreign companies and their branches retain a part oftheir profits in the countries of their operation. The difference between retained earning of the foreign companies located in a country and retained earning of resident companies located abroad is equal to net retained earnings from abroad. Thus, net factor income from abroad is equal to net compensation of employees from abroad plus net property and entrepreneurship income from abroad plus net retained earning of resident companies abroad.

    2. INCOME METHOD
    Net value added at factor cost of a producing unit is identical to the sum of factor incomes – compensation of employees and operating surplus or mixed income of the self-employed entrepreneurs. So, we can sum up compensation of employees and operating surplus or mixed income of the self-employed to estimate national increase.If factor incomes generated by all the producing units within the domestic territory of an economy are added up, net domestic product at factor cost is arrived at.Further, if net factor income from abroad is added to net domestic product at factor cost of an economy, net national product at factor cost or national income of an economy can be estimated. Given net national product at factor cost if the depreciation provision is added to it, gross national product at factor cost is arrived at. If net indirect taxes are added to gross national product at factor cost, gross national product at market price can be calculated.
    The main steps involved in estimating national income by the income method are:
    1) to identify the producing enterprises, which use services of the factors of production
    2) to classify various types of factor payments
    3) to estimate various components of factor payments
    4) to estimate net factor income from abroad, which has to be added to net domestic product at factor cost to arrive at net national product at factor cost or national income of an economy.There are a few points to be kept in mind while estimating national income by income method.
    1) A distinction has to be made between factor and income transfer income. While factor incomes are earned by factors of production, transfer incomes are enjoyed by various economic agents without supplying factor services. It is only factor incomes that constitute national income. Accordingly, transfer incomes are excluded from national income of an economy.
    2) The services of owner-occupied dwellings are equal to imputed rent of the dwelling. Imputed rent adjusted for maintenance expenditure of dwellings included in national income by production method.
    3) Income earned by the act of smuggling or gambling as well as windfall gainslike lotteries are not included in the estimation of national income.
    4) National Income of an economy includes direct taxes like income tax and
    corporate tax. It may be useful to remember that compensation of employees includes income tax to be paid by them and are included in national income before deduction of corporate tax. Death duties, gift tax, wealth tax, etc., are supposed to be paid from the wealth or past savings of those persons who pay these taxes and not out of current income. Therefore, such taxes are not included in the estimation of national income.
    5) Sale and purchase of second-hand goods are not included in national income of an economy. The sale proceeds of second-hand goods received by a person do not relate to any service rendered and, therefore, do not constitute a part of national income.

    3. EXPENDITURE METHOD
    Income generated in the process of production is received by factors of production.Such income can be divided into two parts viz., (a) income from work and (b)income from ownership of capital and entrepreneurship. Incomes from work are enjoyed by the workers while those of ownership of entrepreneurship are enjoyed by their owners. The income earned by factors of production is either saving.Savings generated, in turn, are used for adding to the capital stock or what is called investment. If the final consumption and gross investment expenditure of all economic agents including the rest of the world are added up, this gives us the gross domestic product at market price for an economy. From the GDP at market price, we deduct depreciation provision and net indirect taxes to get net domestic product at factorcost. Add net factor income from abroad to net domestic product at factor cost to get net national product at factor cost (or national income) of an economy. Various components of final expenditures constituting gross domestic product at market price are:
    1) private final consumption expenditure,
    2) government’s final consumption expenditure,
    3) gross domestic fixed capital formation,
    4) change in stock, and
    5) net export of goods and services.

    Private Final Consumption Expenditure
    Private final consumption expenditure is defined as the expenditure on current account of resident and non-resident households in the domestic market and on profit-making bodies serving households. The expenditure, here, relates to outlays on new durable as well as non-durable goods (except land) and on services net of sales (sales less purchases) of second-hand goods, scrap and wastes
    Government Final Consumption Expenditure
    Government final consumption expenditure is defined as the current expenditure on goods and services used up in providing services of government administrative departments less the sales by them. Here, we are considering the services rendered by general government which consists of all departments, offices, organizations and other bodies, which are agencies or instruments of the Centre, state or local public authorities, financed by budgets or extra budget funds. Government enterprises,public corporations and departmental enterprises are excluded from it.

    Gross Domestic Fixed Capital Formation
    Gross fixed capital formation consists of the outlays of industries, producers of government services and producers of private non-profit services to households, on addition of new durable goods to the stocks of fixed assets less net sales of similar second-hand and scrapped goods. The outlays of government services on durable goods for military use are excluded from gross fixed capital formation. In it, outlays on the improvement of land, on the development and extension of timber tracts,Plantations etc., are included, provided they take more than one year to become productive. Outlays by households on residential constructions are also included in gross fixed capital formation. Gross fixed capital formation is inclusive of the consumption of fixed capital. Net fixed capital formation is defined as gross fixed capital formation less the consumption of fixed capital.

    Change in Stocks
    Stocks consists largely of materials and supplies, work-in-progress (except construction projects) and finished products in the possession of industries. Standing timber and crops are not included in stocks, but livestock raised for slaughter, logsand harvested crops are. Change in stocks is the difference between markets or book values of the stocks in the beginning and at the end of the year.Stocks are classified according to the kind of economic activity of the owner or according to type of the items concerned. Classification also provides for (a)stocks of newly produced and imported goods classified according to industries which normally produce these goods, (b) stocks of second hand goods classified according to the type of goods, and (c) stocks of scrap and wastes, classified according to the type of material.
    The physical change in stocks has to be multiplied by the market prices to get the value of change in stocks.

    Net Export of Goods and Services
    Net export of goods and services is the difference between value of export and
    import of goods and services over a year. Accordingly, net export can be positive or negative, positive when exports are more than imports, and negative when reverse is the case.

    In Nigeria, export of goods and services is defined as all transfers of the ownership of goods from residents of the country to non-residents and services provided by resident producers of the country to non-residents. If exports are recorded by the custom authorities, they may consist of the outward movement of merchandise across the customs frontiers of country and of other goods across the boundaries of her domestic territory, including the direct purchases in the country of extra￾territorial organizations and non-resident person

  229. Avatar Eneh Favour onyinyechi says:

    Eneh Favour onyinyechi
    2020/245914
    Economics
    Social sciences
    Assignment: Methods of mesuring national income

    The national income can be measured in three different ways. These are;
    i. The product approach/output approach
    ii. The Income approach
    iii. The expenditure approach

    – The product approach/output approach: This method involves dividing the economy into a number of sectors such as agriculture, maufacturing, commerce etc. The net product or the output for the value added by each sector is now calculated in order to avoid double counting. In others words, the value added by each business is shown by deducting from the total value of the output, the cost of items such as raw materials, transportation and other inputs that were brought from other sectors that produce them.
    -The income approach: Income can be derived in a number of ways. We have income obtained from employment in terms of wages and salaries, income obtained from self employment, public and private sector profits, rent(such as rent recieved by house or land owners, rent recieved by government from various sources and imputed rent of owner occupied houses), net property income from abroad, deduction for stocks appreciation and provision(or addition) for residual error. These will give us the GNP at factor cost which means an actual cost of employing factors of production without regard for taxes and subsidies,when regard is given to taxes and subsidies, we have the GNP at market prices.
    – The expediture approach: The approach calculates the total amount expended on consumption and investment or on goods and service by individuals, firms and government. In summary, the GNP calculation in expenditure approach will be equal to the addition of consumer expenditure by public institutions, expenditure on gross domestic capital formation, increase in physical stocks, exports, and property incomes from other countries minus the addition of property incomes paid to other countries, imports and indirect taxes(less subsidies) and value of physical decrease in stocks.

  230. Avatar Eze Faith says:

    Name: EZE FAITH CHIOMA
    Reg no: 2020/242584
    Department: Economics
    METHODS OF MEASURING NATIONAL INCOME
    * Product method
    * Income method
    * Expenditure method
    PRODUCT METHOD: In this method national income is a measured as a flow of goods and services. It calculate money value of all final goods and services produced in an economy during a year. Final goods which are directly consumed and not user in further production process.

    INCOME METHOD: under this method national income is measured as a flow of factor incomes. There are four factors of production land, labour, capital and entrepreneurship. Labour here wages and salary, capital gets intereste, land gets rents and entrepreneurship gets profit as their remuneration.

    EXPENDITURE METHOD: in this method, national income is measured as a flow of expenditure. GDP is the sum total of private expenditure. Government consumption expenditure, gross capital formulation ( government and private) and net exports (exports – import)

  231. Onyebueke Peace Oluchi
    Reg number 2020/242616
    peace.onyebueke.242616@unn.edu.ng
    1. Output Method
    2. Income Method
    3. Expenditure Method
    1. The Output Method: it is also known as value added method. This is a method of calculating the monetary value of goods and services produced in a given country in a period under review usually a year. In calculating the national income through the output method, care must be taken to avoid double counting of the outputs of all the sectors of the economy.
    2. The Income Method: in this method, the total monetary values of incomes received by individuals, business organizations, government agencies, etc, are calculated. These income includes all interest, salaries, rents eta, received and made in a given period of time usually in a year
    3. The Expenditure Method: This is the calculation of total monetary value of expenditures on goods and services by government, individuals, organizations, etc, within a country in a given period. In this calculation, expenditures on intermediate goods and services i.e. Capital goods and services bought and used for further production must be excluded. This is done to avoid double counting and therefore, the calculation should based only on expenditures on the monetary value of final goods and services.

  232. Avatar Onuoha Chijindu says:

    Name: Onuoha Chijindu
    Reg No: 2020/249380
    Email: chijindub747@gmail.com

    The various methods of measuring National income are:
    (1) The product method
    (2) The income method
    (3) The expenditure method
    Explanations of the above:

    (1)The Product Method:
    In this method, the value of all goods and services produced in different industries during the year is added up. This is also known as the value added method to GDP or GDP at factor cost by industry of origin.
    Here