Q.From the following data, calculate Gross Domestic Product (GDP) by the expenditure method (all figures in Rs crore): Private Final Consumption Expenditure = 4,00,000; Government Final Consumption Expenditure = 1,50,000; Gross Domestic Capital Formation = 1,20,000; Exports = 60,000; Imports = 80,000.

The missing term is the Product Method (also called the Value-Added or Inventory method).

National income is measured by three methods, each known by another name: the income method (also the factor-cost or distributive-share method) sums up factor incomes; the output/product method (also the value-added or inventory method) sums the value added by all producing units; and the expenditure method (also the outlay method) sums final expenditure. Since the income method is paired with 'factor cost method', the output method is correspondingly paired with the product/value-added method.

Agriculture belongs to the primary sector — option (d).

In the Tamil Nadu HSC Class-12 Economics syllabus (National Income), the economy is divided into sectors for measuring output:

• Primary sector — activities that directly exploit natural resources: agriculture, fishing, forestry, mining.
• Secondary sector — manufacturing, industry and construction.
• Tertiary sector — services such as trade, transport and banking.

Among the options, construction and industry are secondary, trade is tertiary, and agriculture is the primary-sector activity.

Completing the correlation: Output method : Product method :: Income method : Factor cost method. Answer: Product method (also called the inventory or value-added method).

Why: National income can be measured by three methods, each with an alternative name:

• Output method — measures national income as the market value of final goods and services (or the value added at each stage) produced in a year; it is also called the product method / inventory method / value-added method.
• Income method — measures national income as the sum of factor incomes (rent, wages, interest, profit); it is also called the factor-cost method / distributive-share method.
• Expenditure method — measures it as total spending on final output.

Since income method pairs with factor-cost method, output method pairs with the product method.

Under the income method, national income is measured by summing up all forms of income.

National income can be estimated by three methods — the product (output) method, the income method and the expenditure method. Under the income method, national income is obtained by adding together all the incomes earned by the factors of production for their contribution to output during a year: rent (for land), wages and salaries (for labour), interest (for capital) and profit (for enterprise), plus mixed income of the self-employed.

Since the question specifically refers to summing up incomes, the correct answer is income (not expenditure, production or taxes — those belong to other methods or are not factor incomes).

The missing term is Income method, which is the same as the factor cost method of measuring national income.

National income can be measured by three methods, each with an alternative name:

The income method adds up the incomes earned by the factors of production for their contribution to output, so it is also known as the factor cost method. Since the output method is also called the product method, the term matching 'factor cost method' is the income method.

The statement is True.

National income is the money value of all final goods and services produced in a country in an accounting year. Since physical goods and services are heterogeneous (cloth, wheat, teaching, etc.) they cannot be added directly; money acts as the common measuring rod to express and aggregate them. Hence estimation of national income is possible with the help of money.

Agriculture belongs to the primary sector.

For measuring national income (product method), the economy is grouped into three sectors:

• Primary sector — activities that directly exploit natural resources: agriculture, animal husbandry, fishing, forestry and mining.
• Secondary sector — activities that convert raw materials into goods: manufacturing, industry and construction.
• Tertiary sector — services: trade, transport, banking and communication.

Here construction and industry belong to the secondary sector and trade to the tertiary sector, so agriculture is the primary-sector activity.