Question

which measure of national income and product account do you favor and why?

Answer 1

Ans.

Variety of measure of national income and product account are used to estimate total economic activity such as gross domestic product,gross national product, net national income etc.

However the most favorable measure of national income account is gross domestic product (GDP). It is accepted as reliable indicator of growth in nations total production and used by analysts to know about economy's growth. GDP provide measure of nation's aggregate economic activity measure in terms of current market prices. As an income measure it has been used in forming policy goals for output, employment and price level changes. It is useful tool in measuring nation's economic output. However GDP measure income but not wealth which is better measure of economic well-being. Moreover GDP is market value of final goods and services produced by nation in a year whereas GNP is market value of goods and services supplied by residents of nation in a year. GNP excludes production in domestic country by foreign owned firms. Moreover in many countries economic model and government policies are limited to domestic operations so GDP is favoured measure of national income and product account. Other than this GNP tells nothing about distribution of society income.