Income method

Income method - Income method: This is the simplest and...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Income method: This is the simplest and most convenient method of computing national income. As per convention all possible incomes earned, fall under one of the four categories. These are wages (W), rent (R), profits (P) and interest (i). When these four categories of income are aggregated at the national level and added up, we get the total of the national income. NI = W + R + P + (i) Though this method is simple it is not quite satisfactory and cannot provide the most accurate information about the value of the national income. Some of the weaknesses that this method suffers from are: a) All possible occasions of earning income are never accurately recorded therefore information available is often incomplete. Government administration, big corporations, factories, semi government organizations etc. maintain their wages, salaries and profit accounts. But large number of small units, self employed persons, small artisans etc. hardly maintain any accounts and even when accounts are maintained they do not supply the requisite information.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/17/2011 for the course EC ec 201 taught by Professor - during the Fall '10 term at Montgomery.

Page1 / 2

Income method - Income method: This is the simplest and...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online