Page 234 - DECO405_MANAGERIAL_ECONOMICS

Unit 14: Calculation of National Income

14.8 Self Assessment Notes

1. State true or false for the following statements:
(a) Under product approach, the factors of production used in the production of a product
are added up.
(b) The three approaches to national income will all lead to different results.
(c) Under expenditure approach net foreign investment is (exports-imports).
(d) Expenditure approach is also known as the income-distributed method.
(e) Product method is known as the final product method.

2. Fill in the blanks:
(a) In India the national income estimates are prepared by the ............................ .
(b) The three approaches to the measurement of national income yield ............................
results.
(c) According to product method, the sum of net value of goods and services produced
at ............................ is found.
(d) Expenditure approach is known as the .............. method.

(e) Personal income = NNP at factor cost - .................. - corporate taxes + transfer payments.
(f) According to product approach, the sum of net value of goods and services produced
at............ is found.

(g) The greatest difficulty in counting the national income is of .............
(h) All inventory changes whether negative or positive are included in the ................... .
(i) The government account is concerned with the.................... of the government sector.
(j) Database is the weakest for .................. sector of the economy.

14.9 Review Questions

1. Discuss one method of computing national income. Is this measurement precise? Why?

2. Examine all standard method of computing national income and social accounting in
India with particular reference to both conceptual statistical difficulties of measurement.
3. Find out what is a national income and product account (NIPA) benchmark or
comprehensive revision.
4. Think and enlist the problems that you might face when comparing national income with
other countries.
5. The data in the table below represent the selling price of the intermediate good. After
converting the tree to paper the paper manufacturer sells the paper to the textbook publisher
for $3.
textbook production:
tree $01
paper $03
book $ 7

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