Solution

National income accounts have three sides: a product side, an expenditure side and an income side. So there are three methods of measuring national Income. They are 1. Output/Production or value added method 2. Incomemethod 3. Expenditure Method · The product side measures production based on concept of value added and has two widely reported measures of overall production namely, Gross Domestic Product (GDP) and Gross National Product (GNP). · The expenditure side looks at the final sales of goods and services, Whereas the income side measures the distribution of the proceeds from sales to different factors of production. · Accordingly, national income is a measure of the total flow of ‘earnings of the factor-owners’ which they receive through the production of goods and services. · Thus, national income is the sum total of all the incomes accruing over a specified period to the residents of a country and consists of wages, salaries, profits, rent and interest.