question_answer

Identify the three phases of circular flow and identify the type of data that is required to measure National Income at each of the three phases of circular flow?

Answer:

The three phases of circular flow of income are the production phase, the income phase and the expenditure phase.                                                                         The following data is required to measure national income at each of the three phases of circular flow: (i) Production Phase The data relating to Net Value Added at Factor Cost in primary, secondary and tertiary sectors and Net Factor Income from Abroad. (ii) Income Phase The data relating to net interest, net rent, net profit and net wages and Net Factor Income from Abroad. (iii) Expenditure Phase The data relating to private consumption expenditure, government consumption expenditure, gross domestic capital formation, net exports, depreciation, Net Indirect Taxes and Net Factor Income from Abroad,