Problems relating to national income estimation, Microeconomics

Problems relating to national income estimation:

Changing prices of goods and services. Prices of goods and services do change from one period to another. This makes comparison of national income estimates from year to year difficult because the yearly estimates are in current prices of the various years (nominal terms)

Multiple or double counting: This is the problem of intermediate goods, intermediate expenditure and transfer payments. There is the likelihood of valuing, for example, both the corn and kenkey, counting expenditure on shoes as well as the leather that was used in making them and counting incomes earned not for productive activities (transfer payments)

Marketability of goods:- Since national income is the money value of goods and services produced in a given period, the problem arises in connection with goods and services that are not exchanged through the market.

Depreciation: - when capital is used in production, it wears and tears. To account for this, capital allowance must be deducted from the GNP to arrive at the NNP. A problem arises of accurately estimating depreciation. If care is not taken, national income will be overestimated or underestimated.


Inadequate statistical data: - one basic problem of estimating national income is the lack of statistical data. Individuals, as well as the businessmen, do not keep proper records of incomes, output, expenditure, etc.

Posted Date: 1/3/2013 12:06:15 AM | Location : United States







Related Discussions:- Problems relating to national income estimation, Assignment Help, Ask Question on Problems relating to national income estimation, Get Answer, Expert's Help, Problems relating to national income estimation Discussions

Write discussion on Problems relating to national income estimation
Your posts are moderated
Related Questions
what are the properties of indifference curve

Methodology of econometrics involving three stages 1. Specification of the model using a specific stochastic equation, together with a priori theoretical expectations about th

if a commodity has limited demand , should economist say that we still have a scarcity ?

income generation in a static and dynamic setting

diagrammatically condition of consumer equilibirium

Development Banks Banks that function as coordinating and intermediary industries to raise capital attract investment, and giving technical assistance for the economic develop

QUESTION 1 : What distinguishes Keynes' Liquidity preference Framework from Friedman's Modern Quantity Theory? QUESTION 2: Analyse the monetary policy tools that the Cen

b) Sally’s firm produces granola bars with a fixed cost of 10 (this cost is already sunk). Her variable cost function is VC = q2 + 2q. Assuming the market for granola bars is comp

Q. Defien Hyper - Inflation? Hyper-Inflation:It's a situation of extremely rapid inflation (reaching 100% per year or more), frequently resulting from a condition of political

when total production fall what,s the status of average product and marginal product