The time period of ______ year(s) is taken into account in calculating national income.

Key Points

• National income of a country means the sum total of incomes earned by the citizens of that country during a given period, over a year.
• The time period taken into account in calculating national income is usually one year or a fiscal year, which is the period for which a company or government prepares its financial statements.
  • However, in some cases, a longer period of two years is taken into account to account for fluctuations in economic activity due to seasonal factors, natural disasters, or other exceptional events.
  • This longer period helps to smooth out the impact of short-term fluctuations and provides a more accurate picture of the overall economic performance of the country.
• National income is an important indicator of a country's economic performance and is used by policymakers, investors, and analysts to make decisions about economic policies and investments.

Additional Information

• National income is calculated using various methods, such as the output method, income method, and expenditure method.
  • The output method measures national income by adding up the value of all goods and services produced in the country, while the income method measures it by adding up all the income earned by individuals and businesses in the country.
  • The expenditure method measures national income by adding up all the spending on goods and services by households, businesses, and the government.
  • The income method measures all the income earned by all the factors of production in an economy.