Elements of national income
How To Measure National Income And Personal Income?
National income is the sum of the earnings from all factors of production (land, labor and capital) that come from current production of goods and services. National income is closely related to GNP but it does not equal GNP because GNP includes depreciation and indirect taxes and “other” items. Therefore, GNP minus depreciation equals net national product. Net national product minus indirect taxes and “other” items equals national income.
Personal income is the national income accounts measure of the income received by persons from all sources. Disposable personal income equals personal income minus personal tax payments. These income measures differ from national income because they do not include elements of national income that are not received by persons (corporate tax payments, retained earnings and payroll taxes) and add income of persons from sources other than current production of goods and services (transfer and interest payments).
Personal income is the national income accounts measure of the income received by persons from all sources. Disposable personal income equals personal income minus personal tax payments. These income measures differ from national income because they do not include elements of national income that are not received by persons (corporate tax payments, retained earnings and payroll taxes) and add income of persons from sources other than current production of goods and services (transfer and interest payments).