What Are The Advantages Of The Income Approach Of National Income Measurement?


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Rosie Normanton answered
In measuring the spending, output and income of a country’s economy over a certain period of time, a country’s national income can be calculated. Economists use three different methods in order to arrive at their conclusions. These figures are determined by establishing the entirety of output of goods and services produced by the particular country, the total incomes produced via the production of goods and services in that country and the total amount of expenditure in the economy of the country, which is taking place during that time.
The benefits of such research helps economists to work out any changes of living standards and identify the distribution of wealth as well as revealing the rates of economic growth of the country. The income approach of national income measurement is one of three approaches, these include the expenditure approach, the production or output approach, and of course the income approach. Each of these systems of measurement refers to different sets of data.
Data collated from the income approach comes from the wages of self-employed individuals and people in regular employment, profits generated by private sector companies and rental income from land or properties. This should produce the same outcomes to the other methods, as it stands to reason that total expenditure of goods and services must tally with the amount of goods and services produced, which in turn must equate to the total income paid to the people and businesses responsible for the manufacture and delivery of those goods and services.
In this respect the income approach of national income measurement is an invaluable way of confirming and validating the results obtained by the expenditure and production methods.

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