Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: National Income Accounting

Question:

Arrange the following steps in calculation of National Income by "Income method" in the correct sequence:

  1. Add net factor income from abroad to arrive at National Income
  2. Estimate the factor income paid by each sector
  3. Identify and classify the income-generating units
  4. Calculate domestic factor income

Choose the correct answer from the options given below:

Options:

B, D, A, C

D, B, C, A

C, B, D, A

C, A, B, D

Correct Answer:

C, B, D, A

Explanation:

Following are the steps in the correct order for the calculation of the National income with the help of "Income method":

  1. Identification and classification of various income-generating units
  2. Estimation of the factor income paid by each sector
  3. Calculation of the Domestic factor income (NDPFC)  = Compensation of employees + Operating Surplus + Mixed Income of Self-employed
  4. Add net factor income from abroad to arrive at National Income/ Calculation of National income (NNPFC) = NDPFC + NFIA