Discuss five problems that a country may face when measuring her national income using the output approach.

Discuss five problems that a country may face when measuring her national income using the output approach.

 Problems that may be faced when measuring national income using the output approach include:

1.  Inadequate or incomplete data — difficulties will be experienced in valuation due to unavailability or inaccuracy of output figures.
2. Determination of goods and services to be included — difficulties regarding which goods and services to include in the calculation of national income.
3. Subsistence sector — problem arises in the valuation of output of the subsistence sector since the goods are never priced.
4.  Value of stock — There is a problem on what to assign to the stock of goods to be included in the national income, whether it should be value at cost or at market price.
5.  Price fluctuation — prices of goods may vary from time to time hence there is a problem of deciding whether to attach historical cost or market price.
6.  Double counting. it may be difficult to distinguish between primary and intermediate output or between intermediate and final output.
7.  Lack of qualified personnel who may be to compute and even collect data.
8.  Inadequate finance capital equipment and technology to be used when gathering and compiling data.

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