Methods Of Estimating National Income There are 3 methods of estimating National Income of an economy:
- a) Product or Value Added Method: In this method the value added by different industries to the value of the final product is calculated. To arrive at the net value added by an industry we deduct the value of raw materials or intermediate goods used by this industry from the value of its output.
- b) Income Method: This method approaches National Income from distribution side. National Income is obtained by summing up of the incomes of all individuals in the country.
- c) Expenditure Method: In this method we sum up all the consumption and investment expenditures made by all individuals as well as Government of a country during a year.