Explain Measurement Of National Income or Explain Measuring GNP

if they ask you explain measurement of national income
explain measuring GNP (gross National Product) 
Note yeh dosra economics ka important answer hai jo har saal long mein ata hai 
XI Economics Measurement Of National Income or Measuring GNP

Ans)MEASUREMENT OF NATIONAL INCOME OR MEASURING GNP

National income can be measured by three ways.

PRODUCTION METHOD OR NATIONAL INCOME AT MARKET PRICE METHOD
According to this method first economy is divided into different sectors such as agriculture, industrial, mining, and other services etc. at the second stage, the market value of goods and services produced each sector aggregated and then Gross National Product (GNP) is achieved. After that total depreciation cost, indirect taxes are deducted and subsidies are added in GNP and then we get National Income.
Formula: NI = GNP – D.A – INDIRECT TAXES + SUBSIDIES

Sector of economy
Values of goods & services produced in a year
Total agricultural production
Total Industries production
Total Mineral production
Total Services
Remittances come from abroad 

Rs. 50000
Rs. 50000
Rs. 50000
Rs. 50000
Rs. 50000
G N P          Rs. 250,000
Less: - Allowances for depreciation     Rs. (20000)
Less: - Indirect taxes     Rs. (20000)
Add: subsidies                                                    Rs. 10000
                                                     N.I              Rs.  220,0000

INCOME METHOD OR NATIONAL INCOME AT FACTOR COST METHOD

This method approaches national income from its distribution side when it has been distributed to the factors of production in the form of rent, wages, interest & profit, amongst the various factors of the production in a country. If we aggregate rent, wages, interest & profit received by the people during a year we get national income Therefore national income can also be measured as:

National income = rent + wages + interest + profit
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EXPENDITURE METHOD
This method arrives at National Income by adding up all the expenditures made goods and services during a year in a country. National Income can get by adding up all consumption expenditures, and investment expenditure made by individuals as well as govt. of a country during a year. That’s expenditures given below

  • PRIVATE CONSUMPTION EXPENDITURE
The amount, which was spent on consumer goods and services by private sector (individual), is called private consumption expenditure.

  • PRIVATE INVESTMENT EXPENDITURE
The amount, which was spent on replacement, renewals and new investment by private sector (individual), is called private investment expenditure.

  • PUBILC CONSUMPTION EXPENDITURE
The amount, which was spent on consumer goods and services by public sector (government), is called public consumption expenditure.

  • PUBLIC INVESTMENT EXPENDITURE
The amount, which was spent on replacement, renewals and new investment by public sector (government), is called public investment expenditure.

  • NET FOREIGN INVESTMENT
  • NET EXPORT


EXPENDITURE METHOD
(It means expenditure on the purchase of final goods and services)
Consumption
Expenditure (C)
1. Durable goods such as car, furniture
2. Non durable goods such as food, petrol
Rs 2,000
Private Investment (I)1. New plant and machinery
2. Inventory/ Stocks investment
Rs 1,500
Government Expenditure (G)1. Non Development expenditure such as Salaries to employees
2. Development expenditure such as Construction of roads and dams
Rs 1,000
Foreign Expenditure
(X – m)
1. Exports = Rs 800 minus
2. Imports = Rs 300
Rs 500
Total Expenditure or Gross National ProductRs. 5,000


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