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Methods of calculating National Income
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This lesson discusses the different methods of calculating national income with the help of circular flow

Arpita Prakash
NCERTs series initiator at Unacademy 'Educator of the Month' for Feb'19 CBSE 0.1% Merit Certificate holder in Mathematics

Unacademy user
Thank you sir for making concepts crystal clear...
Shrenik Jain
a year ago
Welcome 😃
thanks Arpita, 11/10 for your efforts, I have watched your all lessons of geography and I don't have enough words to thank. you for simplifying geography ncerts, but in this lesson of economics I think you have unnecessarily complicated things, it's very easy to understand aggregate for some who is reading 12th ncert One suggestion - please don't over complicated things, please don't take it negatively, I am a fan of your courses😊
I think it was a simple concept that in simplified economy Spending = Earning always for both, firms and consumers
ma'am please indicate chapter no. and their parts in title
mam many days it(complete book) take?
  1. Spending Goods and Services Firms Households Factor Payments Factor Services Fig. 2.1: Circular Flow of Income in a Simple Economy

  2. Income spent on the goods and services produced by firms is the aggregate expenditure received by firms Value of expenditure Value of goods and services Aggregate income aggregate value of goods and services produced by firms When the aggregate received by the firms is paid out to factors of production, it takes form of aggregate income Point A- Expenditure Method- measure of aggregate value of spending that firms receive for final goods and services which they produce Point B- Product Method- measure of aggregate value of final goods and services produced by all firms . Point C- Income Method- measuring sum total of all factor payments . Equal flows at Point A and C . Also rise in the flow at one point must eventually lead to a rise in the flow at all levels o Even if an economy decides to spend more than the present level of income, it's income will eventually rise to a level consistent with higher spending level Macroeconomic model- describes the functioning of an imaginary economy doesn't describe an actual economy in detail o Assumptions- no household savings, no government, no trade with countries Even in any complicated economic system, annual production of goods and services estimated through each of three methods is same