ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Using the output approach, we can measure the size of a nation’s economy by considering the monetary value of consumer spending, if all of the factors of production involved in the production of the goods and services originated from the nation’s economy.

Detailed explanation-2: -In other words, under the Income Method of calculating National Income, all incomes of a country accruing to the factors of production through rent, wages, profits, interest, etc., are added up together for the determination of National Income.

Detailed explanation-3: -Measurement of National Income – Income Method Estimated by adding all the factors of production (rent, wages, interest, profit) and the mixed-income of self-employed.

Detailed explanation-4: -Income method: according to this method income is measured as flow of factors income. 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.

Detailed explanation-5: -Product method of calculating national income Under the product 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.