Meaning:

The total income of the nation is called national income, the aggregate economic performance of the whole economics is measured by the national income data. In fact national income data provides summary statement of a country aggregate economic activity. in real times national income is the flow of goods and services produced in an economy in a particular period of time, in short national income is the value of goods and services produce during a given counted  without duplication. The methods of estimation of national income are income method, expenditure method and product method.

Methods of Estimation.

National income information can be measured at three methods:

1. income method
2. expenditure method
3. product method    

Income method: this method approaches national income from distribution side. In the study of circular flow income we come across the sum total income receive by all the factors of production taken together. Household supply the factors of production they receive income in the form of wages, rent ,interest and profit under  income method national income is obtained by adding of the income received by all the individuals of a country.

Expenditure Method: Expenditure method looks at the demands side of the product. Consumers, investor and government purchase goods and services. If we add the gross expenditure made in year we get national income. Thus according to this matter the total final expenditure incurred on goods and services is added up income can be spent on consumers good and capital good. Hence we can get a GDP by adding up all consumption expenditure made by all individual, institutions and the government during a year.

Product method: This method is also known as output method or inventory method. Under this method the national income is estimated by aggregating the value of all final goods and services produce in a country during one year. The product method is followed into ways.  First it by adding up all values of all final goods and services product during a year at the market price. Secondly by adding up all values at each higher stage of production until these products are turn into final products the former is called the final goods method and the latter the value added method.

The final good method: According to this method the value of all final goods and services producing different sector is include and the value of all intermediate good is ignore this is so because the value of final goods includes the value of intermediate goods.

For example, the price of bread include the cost of wheat, cost of making floor etc. their values are paid up during the process of production therefore the values of intermediate goods accounted separately it would mean double counting to avoid this the value of only final product must be computed.

The value added method: According to these method the value added at each stage of production process is include the difference between the value of final outputs and inputs at each stage of production is called the value added. Thus GDP is obtained as the sum total of all values added by all the different stages of the production till the final output is reach in the hands of consumer; this can be illustrated with the help of the following table.

also read: explain the difficulties in the estimation of national income.