Question : Which of the following is NOT a method to calculate national income?

 

Option 1: Output method

Option 2: Expenditure method

Option 3: Income method

Option 4: Profit method

Correct Answer: Profit method

Solution : The correct answer is (d) Profit method.

The profit method is not a method used to calculate national income. The methods commonly used to calculate national income are:

Output method: This method calculates national income by measuring the total value of goods and services produced within an economy during a specific period. It focuses on estimating the value of the final goods and services produced in different sectors or industries.

Expenditure method: This method calculates national income by measuring the total spending on goods and services within an economy during a specific period. It considers the consumption expenditure by households, investment expenditure by businesses, government expenditure, and net exports (exports minus imports).

Income method: This method calculates national income by measuring the total income earned by individuals and businesses within an economy during a specific period. It considers different components of income, such as wages, salaries, profits, rents, and interest.

The profit method is not a recognized method for calculating national income. While profits are an important component of income, they are accounted for within the income method, along with other types of income.