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What is national income? What is its importance? Explain the various methods of national income computation.

Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

4. What is national income? What is its importance? Explain the various methods of national income computation.  (250 words)

Difficulty level: Easy

Reference: Insights on India

Why the question:

The question is part of the static syllabus of General studies paper – 3 and mentioned as part of Mission-2023 Secure timetable.

Key Demand of the question:

To write about national income, its importance and methods to compute it.

Directive word: 

Explain Clarify the topic by giving a detailed account as to how and why it occurred, or what is the context. You must be defining key terms wherever appropriate and substantiate with relevant associated facts.

Structure of the answer:

Introduction: 

Begin by defining national income.

Body:

First, write about the importance of national income as a macroeconomic parameter and it indicates.

Next, write about the various methods of computation of national income – Product Method, Income Method and Expenditure Method.

Conclusion:

Conclude by summarising.