(b) Production of goods and services is the basis for determining National Income. It is calculated by the total value of goods and services produced in the country. Hence, option (b) is the correct answer. The sum of total income received for the services of labour, land or capital in a country is called National Income (NI). National Income can be calculated through three methods: Product method, Expenditure method and Income method. Formula to calculate National Income
Where, C denotes the Consumption, denotes the Government expenditure, I denotes the Investments, X denotes the Net Exports (Exports minus Imports), F denotes the National Resident's Foreign Production, D denotes the Non-National Resident's Domestic Production