Income earned through illegal activities like smuggling, black- marketing, gambling, betting, adulteration, bribery etc. are excluded on the ground that these activities are illegal and, therefore, cannot be included in the national income accounts.
What are the difficulties of measuring national income of a country?
There are other difficulties in the measurement of national income such as lack of occupational specialization. Lack of statistical data, lack of illiteracy and ignorance, income earned from abroad.
What are the major difficulties faced in the computation of national income?
Here we detail about the six major difficulties faced by a country during computation of national income. 1. Types of Goods and Services: The kinds of goods and services which should be included in national income pose a problem.
Are there any problems with measuring national income?
The measurement of national income encounters many problems. The problem of double-counting has already bee noted. Though there are some corrective measures, it is difficult to eliminate double-counting altogether. And there are many such problems and the following are some of them. The measurement of national income encounters many problems.
How are constant prices used in national income statistics?
Constant Prices: a methodology used to overcome the affect inflation has on national income statistics. It is done by choosing a base year and taking all the prices of all the products to be produced at a value of 100. Then the change in prices in subsequent or previous years are expressed as a percentage of the prices prevailing in the base year
How are inventories treated in national income accounts?
We have already noted how inventories are to be treated in national income accounts. However, while estimating national income of a country, one problem has to be faced. This problem arises due to price level changes, i.e., inflation and deflation which lead to stock appreciation or depreciation.
