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Q:

While computing National Income estimates, which of the following is required to be observed?

  • 1
    The value of exports to be added and the value of imports to be subtracted
  • 2
    The value of exports to be subtracted and the value of imports to be added
  • 3
    The value of both exports and imports to be added
  • 4
    Thevalue of both exports and imports to be subtracted
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Answer : 1. "The value of exports to be added and the value of imports to be subtracted"
Explanation :

National Income of a country can be defined as the total market value of all final goods and services produced in the economy in a year. In expenditure method, the National Income is measured by adding up the four flows, - namely C, I, G, X and M.

Thus, Y = C+1+G + (X-M) + (X- M) Where,

C = Total consumption expenditure

I = Total investment expenditure

G = Total government expenditure

X = Export,

M = Import

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