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There are three main methods to calculate National Income: 1. Value added method which sums the Gross Value Added at market prices (GVAmp) of all firms to get Gross Domestic Product at market prices (GDPmp), then makes adjustments. 2. Income method which sums compensation of employees, operating surplus, and mixed income to get Net Domestic Product at factor cost (NDPfc) and then adds net factor income from abroad. 3. Expenditure method which expresses GDPmp as the sum of final consumption (C), investment (I), government spending (G), and net exports (exports (X) minus imports (M)), and then makes similar adjustments to get Net National Product at factor
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- 1. National Income Measurement and its Method Navratan Sharma SMPS Three methods of calculatingNational Income 1.Value added methodGVAmp (Sales+∆Stock)-IntermediariesGoods NVAfc=GVAmp-D-NIT GVAfc=GVAmp-NIT GDPmp issum of GVAmpof all firms. National Income means:NNPfc=GDPmp-D+NFIA-NIT G=stands for gross means includingdepreciationsoG converts in to N D=stands for domesticmeansexcludingNFIA(International trade) so whenNFIA is addedto Domestic it become national D converts into N Fc=stands for factor cost means withoutindirect tax if Indirecttax includesit become market price so FC converts intoMP 2.Income Metod Sum up COE+OS+MI denotesNDPfc NDPfc+NFIA=NNPfc 3.Expenditure Method GDPmp=C+I+G+(X-M) NNPfc=GDPmp-D+NFIA-NIT YOUCAN SOLVE ALL MEASURMENTS WITH THE HELP OF GIVENCHART