EconomicsNEB 2075 (old course)

Write any four difficulties in measurement of national income.

2

Answer

  1. Non-Market Activities: National income measurement often excludes unpaid household work (e.g., childcare, cooking) and volunteer services, leading to underestimation of true economic output.

  2. Underground Economy: Illegal activities (e.g., smuggling, black-market transactions) and unreported income are difficult to track, causing significant underreporting.

  3. Valuation Problems: Pricing goods and services (e.g., healthcare, education) at market prices can be misleading, especially for government-provided services with no direct market value.

  4. Double Counting: Including intermediate goods (e.g., raw materials, semi-finished products) in final output calculations inflates national income figures, requiring careful adjustment to avoid overestimation.

Discussion

Loading…

More Economics questions

All Economics old questions