Problems relating to national income estimation, Microeconomics

Assignment Help:

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.


Related Discussions:- Problems relating to national income estimation

Short-run and long run profits questions, Suppose you own a home remodeling...

Suppose you own a home remodeling company. You are currently earning short-run profits. The home remodeling industry is an increasing-cost industry. In the long run, what do you ex

Equibilium, Suppose Dlamini has R5 000 to spend on trousers and shirts. The...

Suppose Dlamini has R5 000 to spend on trousers and shirts. The price of trousers is R500 each and that of shirts is R312.50 each. 6.1 Use the information and calculate consumer eq

#title.2. Profit maximization is theoretically the most sou., Ask question ...

Ask question #Minimu2. Profit maximization is theoretically the most sound but practically unattainable objective of business firms. In the light of this statement critically appra

Cost, define cost its types with curves

define cost its types with curves

Enumeration of workers, ENUMERATION OF WORKERS: Now, let us discuss ab...

ENUMERATION OF WORKERS: Now, let us discuss about the sources of data in India on workers. In India, two main organisations which generate and compile data on workers are the

Keynesian cross, explain how the keynesian cross shows that the economy is ...

explain how the keynesian cross shows that the economy is susceptible to self-fulfilling prophesies, either positive or negative

Homework, the difference between an lc3 and other types of businesses is th...

the difference between an lc3 and other types of businesses is that

Kolbey:s reaction, why can methane not be prepared by this reaction

why can methane not be prepared by this reaction

Draw a graph of the market for reserves, During summer of 2006, China incre...

During summer of 2006, China increased their reserve requirement for the banking system while maintaining a fixed target for the interbank lending interest rate. Draw a graph of th

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd