There exist various indices to measure development of an economy in addition to GDP. They are: Human Development Index (HDI) Social Progress Index(2015) Green GDP Gross National Happiness(GNH) Genuine Progress Index (GPI) Click on each of the above indices to learn about them in detail
IAS
Methods for Measuring National Income The national income of a country can be measured by three alternative methods: (i) Product Method (ii) Income Method, and (iii) Expenditure Method. Product Method: In this method, national income is measured as a flow of goods and services. We calculate money value of all […]
Methods in measuring National Income
Base year Year used as the beginning or the reference year for constructing an index, and which is usually assigned an arbitrary value of 100. The estimates at the prevailing prices of the current year are termed as "at current prices", while those prepared at base year prices are termed […]
Base Year, Current and Constant Prices
Factor Cost(FC) and Market Price(MP) Factor cost refers to the actual cost of the various factors of production and it includes government grants and subsidies but it excludes indirect taxes. Whereas market price refers to the actual transacted price and it includes indirect taxes- custom duty, excise duty, sales tax, […]
What are Factor Cost and Market Price?
Difficulties faced in Estimating National Income (1) Problems of Definition: What should we include in the National Income? Ideally we should include all goods and services produced in the course of the year, but there are some services which are not calculated in terms of money, e.g., services of housewives. […]
What are the problems faced in calculating National Income?
Closed Economy Closed economy is an economy, which does not have any sort of economic relation with rest of the world but is confined to itself only. A closed economy does not enter into any one of the following activities.It neither exports goods and services to the foreign countries nor […]
Closed and Open Economies
What is National Income? National income is the money value of all the final goods and services produced by a country during a period of one year. National income consists of a collection of different types of goods and services of different types. Since these goods are measured in different […]
What is National Income Accounting?
Trade off Tradeoffs involve making choices in policy making wherein there is a compromise on one goal to achieve another goal. It is a way of balancing among desirable goals. In order of one’s preference and priority, it may be necessary to forego one alternative over the other. For example, […]