Question

Which one of following is not a measure of National Income of a country?

• A. Income approach
• B. Product approach
• C. Expenditure approach
• D. Investment approach

Hint:

The three methods of national income measurement are income method, product method, and expenditure method.

Answer 1

The Correct Option is D

Concept: National income can be measured using three main methods: income method, product method, and expenditure method.

Step 1: Understanding income approach.
The income approach measures national income by adding incomes earned by factors of production. \[ \text{National Income} = \text{Rent} + \text{Wages} + \text{Interest} + \text{Profit} \]

Step 2: Understanding product approach.
The product approach measures national income by adding the value of final goods and services produced in the economy.

Step 3: Understanding expenditure approach.
The expenditure approach measures national income by adding expenditure on final goods and services. \[ Y = C + I + G + (X-M) \]

Step 4: Identifying the incorrect method.
Investment approach is not a separate standard method of measuring national income. Investment is only a component of expenditure approach. Therefore, the correct answer is Investment approach.