Question

1.Discuss various measures of National income accounting. What are the various components and methods of calculating GDP?Do you think Gdp as an economic indicators truly depicts the economic and social welfare of an economy? why or why not?

Answer 1

Solution :- National Income Accounting is just a type of accounting with the help of which government or any person analysis the economic growth of the company

There are various measures of national income accounting Such as

1. Gross Domestic Product (GDP) :- GDP is a measure for national income accounting It measures the monetary value of all the goods and services produced with in a nation.

2. Gross national Product (GNP) :- GNP is also a broad measure of National income It includes the total value of finished goods and services produced by the nationals with in a specific period.

3. Gross National Income (GNI) :- It is just same as a gross national product The difference is that it also include the income earned by residents with in the abroad along with nations also.

There are Four components of GDP that are

1. Personal consumption

2. Business investment

3. Government Spending

4 Net Exports

There are three methods of Calculating GDP

1. Income Approach :- Which is Calculated by the sum of the factor income to the various production factors.

2. Expenditure Approach :- As per this approach GDP is simply calculated by

Consumption + Investment + Government Expenditure + Exports - Imports

3. Output Approach :- It is also Called as value added approach and calculated simply by the addition of new value added. In this there is a main focus on finding total output done by a nation .

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