Distinguish between Product / Output Method and Expenditure Method.

1.	Distinguish between Product / Output Method and Expenditure Method.
Answer» Output Method Or Product Method: 1. According to the product or output method, National Income is estimated by adding up the value of all final goods and services produced in the country during one year. 2. NI = C+I+G+(X-M)+(R – P) – Depreciation – Income Tax + Subsidies 3. In India, this method is applied to agriculture, mining and manufacturing. 4. Here we look at National Income from production side. 5. In this method we deduct indirect tax and then add subsidies to arrive at National Income at Factor Cost from Market Price 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»

Output Method Or Product Method:

1. According to the product or output method, National Income is estimated by adding up the value of all final goods and services produced in the country during one year.

2. NI = C+I+G+(X-M)+(R – P) – Depreciation – Income Tax + Subsidies

3. In India, this method is applied to agriculture, mining and manufacturing.

4. Here we look at National Income from production side.

5. In this method we deduct indirect tax and then add subsidies to arrive at National Income at Factor Cost from Market Price

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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