methods for measuring national income

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UNIT 10 NATIONAL INCOME: CONCEPT AND
MEASUREMENT
MODULE - 3

UNIT 10 NATIONAL INCOME:
CONCEPT AND MEASUREMENT

National Income:
Concept and Measurement

NOTES

Structure
10.0
10.1
10.2
10.3

Introduction
Unit Objectives
Definition of National Income
Measures of National Income
10.3.1 Gross National Product (GNP); 10.3.2 Gross Domestic Product (GDP);
10.3.3 Net National Product (NNP);
10.3.4 National Income: Some Accounting Relationships

10.4

Methods of Measuring National Income
10.4.1 Net Output or Value-Added Method; 10.4.2 Factor-Income Method;
10.4.3 Expenditure Method

10.5
10.6
10.7
10.8
10.9
10.10

Choice of Methods
Measurement of National Income in India
Summary
Answers to ‘Check Your Progress’
Exercises and Questions
Further Reading

10.0 INTRODUCTION
We have so far been concerned with microeconomic aspects of managerial economics.
This chapter onwards, we will deal with macroeconomic aspects of managerial economics. The major aspects of macroeconomics that are generally used in business analysis, especially in analyzing and understanding business environment of the country include (i) the level and trends in national income, (ii) factors determining national income,
(iii) factors and forces leading to business cycles, (iv) the trend in general lend of price, especially inflation, (v) international economic aspects, and (vi) government policies, especially fiscal and monetary policies. In this chapter, we will discuss the meaning and methods of measuring national income and the methods of measuring national income in India.

10.1 UNIT OBJECTIVES
To define national income and its importance
To discuss various methods of measuring national income
To describe the methods used in India for measuring national income
To show the growth and trends in national income of India

10.2 DEFINITION OF NATIONAL INCOME
National income is the final outcome of all economic activities of a nation valued in



References: Theory and Methodology, New York University Press, New York, 1958. 3. Some often quoted estimates were made by F.J. Atkinson, (1875 and 1895); Major Baring (1881); W Vakil and S.K. Muranjan (1891–94 and1911–14); Shirras Findlay (1911 and 1921); K.T 29 and 1931–32); Commerce, Journal (1938–39, 1942–43 and 1947–48). (Year in the parantheses are the reference years). Copyright © Author, 2010 All rights reserved

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