May 1st, 2009
Comments off
There are three (3) basic approaches or method in measuring national income namely:-
- Income approach
- Expenditure approach
- Output/Product approach
Below summarizes the INCOME APPROACH/METHOD in computing or measuring national income:
|
INCOME APPROACH
|
|
· Calculates GDP by summing up the incomes received by producers including profits and taxes paid to the government. The key part to this approach is national income
· National income is the total money value of all income received by persons and enterprises in the country during a year.
|
- Components using this Income approach:
|
Wages and Salaries
|
|
+
|
Interests and dividends
|
|
+
|
Rent
|
|
+
|
Profits(including undistributed profits and income from self-employment)
|
|
=
|
Gross Domestic Income at factor costs(fc)
|
|
–
|
Income paid abroad
|
|
+
|
Income received from abroad
|
|
=
|
Gross national income at fc
|
|
–
|
Depreciation or Capital consumption
|
|
=
|
Net National Income at fc
|
|
=
|
National Income
|
|
|
|
Click here to go back to main content page on National Income
|
Comments are closed now.