Distinguish between Income Method and Expenditure Method.

1.	Distinguish between Income Method and Expenditure Method.
Answer» Income Method: 1. It is the sum of income earn by all factors of production in a year. 2. In this method, national income is estimated from the distribution side 3. Symbolically – NI = R + W + I + MI + (X-M) 4. This method is extremely popular in developed countries. Expenditure Method: 1. It is the sum of expenditure incurred by private sector and government on consumption and investment in a year. 2. In this method, national income is estimated from the expenditure side. 3. Symbolically -NI = C + I + G + (X-M) + (R-P) 4. This method is very rarely used by any country.

Answer»

Income Method:

1. It is the sum of income earn by all factors of production in a year.

2. In this method, national income is estimated from the distribution side

3. Symbolically – NI = R + W + I + MI + (X-M)

4. This method is extremely popular in developed countries.

Expenditure Method:

1. It is the sum of expenditure incurred by private sector and government on consumption and investment in a year.

2. In this method, national income is estimated from the expenditure side.

3. Symbolically -NI = C + I + G + (X-M) + (R-P)

4. This method is very rarely used by any country.

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