Q.There are no theoretical difficulties in the measurement of National Income.

Disagree. Measuring national income faces real theoretical difficulties — the danger of double counting, the treatment of transfer payments, unpaid/non-market services, income from illegal activities, capital gains and second-hand goods. So it is incorrect to say there are no theoretical difficulties.

Besides practical difficulties, the very concepts used in national-income measurement raise theoretical problems, so the statement must be disagreed with. The main theoretical difficulties are:

1. Problem of double counting: If the value of both intermediate and final goods is added, the same output is counted more than once; only value added or final goods must be counted, and deciding this is not always easy.

2. Treatment of transfer payments: Payments like old-age pensions, scholarships and gifts are received without any current production, so whether to include them is a theoretical issue (they are excluded).

3. Non-market / unpaid services: Services of a housewife or self-consumed farm produce add to welfare but are hard to value in money and are usually left out.

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