Question

Explain the three ways of measuring the national income figure.

Answer 1

The national income figure may be measured through:

(i) Product Method

This method involves measuring national income as the flow of services and goods. In this case, the money value of each final service and good produced is calculated within a year.

(ii) Income Method

Based on this method, factor incomes flow is the way national income tends to be measured.

(iii) Expenditure Method.

This method involves measuring the national income figure based on the expenditure flow.