The product method of calculating national income is also known as the
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → value added method
The product method adds up the value added by every firm, so it is also called the value added method.
NCERT (2026-27): “2.2.1 The Product or Value Added Method In product method we calculate the aggregate annual value of goods and services produced (if a year is the unit of time). How to go about doing this? Do we add up the value of all goods and services produced by all the firms in an economy? The following example will help us to understand. …” “2.2.1 The Product or Value Added Method … The term that is used to denote the net contribution made by a firm is called its value added. We have seen that the raw materials that a firm buys from another firm which are completely used up in the process of production are called ‘intermediate goods’. Therefore the value added of a firm is, value of production of the firm – value of intermediate goods used by the firm. …” |