BOUT ME .Graduation in Computer Engineering from Panjab University, Chandigarh. . Post-graduation in Business Administration from Panjab University, Chandigarh . Cleared UPSC Preliminary Examination thrice .Appeared for UPSC interview. . Working at Career Launcher. .Follow me at http://unacademy.in/user/goyalsamridhi02
MEASUREMENT OF NATIONAL INCOME National Income is calculated by 3 ways: Value Added Method Income Method Expenditure Method
INCOME METHOD As the name suggests this methods emphasises on aggregating the payments made by: Firms to households Banks to households/ firms Called factor payments - Households and firms to government - Banks to government
INCOME METHOD A method of computing GDP that measures the income- wages, rents, interests and profits- received by all factors of production of producing final goods Example: This is used for calculating GDP for services sector where calculating total output is difficult.
CAVEAT Any income corresponding to which there is no flow of goods and services or value added, it should not be included in calculation by income method
PILLARS 1. Compensation Salary + Boss contribution to Social Security 2. Mixed Income+ Operating Surplus 3. Componesation of Fixed Asset during production
COMPUTATION GVA@ Basic prices- GVA at factor cost + Production Taxes- Production Subsidies GVA at Factor cost -Compensation Salary + Boss contribution to Social Security+Mixed Income + Operating Surplus+ Componesation of Fixed Asset during production. Production Taxes include stamp Duty,land Revenue, professional Tax Production Subsidies include railways, farmers, SSI ,corporation,etc
COMPUTATION GDP at Market Price= Sum of GVA @Basic Prices + Product Taxes- Product Subsidies GDP @ constant prices (official). GDP at Market Price with inflation price adjusted with base year(2011)