Economic Awareness - Sectors of Indian Economy
Which of the following best explains why the three methods of measuring national income may not yield exactly the same figure in practice?
Which of the following best explains why the three methods of measuring national income may not yield exactly the same figure in practice?
hard Q10 of 15
Step-by-Step Solution
Step 1: Understand theoretical equivalence vs practical differences
The three methods should theoretically give the same national income, but practical issues cause discrepancies.Step 2: Analyze causes of differences
Differences arise due to varying data sources, timing of recording transactions, and measurement errors.Step 3: Why other options are incorrect
Theoretical definitions of GDP are consistent across methods. Government expenditure is included in Expenditure Method, not Income Method, but this does not cause discrepancy. Base years are standardized for national accounts.Final Answer:
Differences in data sources and timing of recording transactions → Option BQuick Check:
Practical differences = data sources and timing issues ✅
Quick Trick: Discrepancies arise from data and timing, not theory.
Common Mistakes:
- Assuming theoretical differences cause discrepancies.
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