1.

State the various components of the income method that are used to calculate national income.

Answer»

1. Compensation of employees: The amount earned by employees from their employer, whether in cash or in kind or through any other social security scheme is known as compensation of employees. 

2. Operating Surplus: It is the sum of income from property and income from entrepreneurship. 

3. Mixed Income: Income of own account workers (like farmers, doctors, barbers, etc.) and unincorporated enterprises (like small shopkeepers, repair shops) is known as mixed income. 

Note: (i) To estimate amount of factor payments made by each producing unit. (ii) To add all factor incomes/payments within domestic territory to get domestic income, i.e., NDPFC. 

NDPFC = Compensation of employees + Operating Surplus + Mixed Income 

4. Net factor income from Abroad(NFIA): NFIA is the difference between income earned by normal residents from rest of the world and similar payments made to Non residents within the domestic territory. Addition of NFIA to NDPFC to get NY, i.e., NNPpc. NNPFC = NDPFC + NFIA.



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