What Is The Formular To Calculate Income Approach In National Income?


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anthony arinaitwe Profile
The income approach    In this method, we add together the following  incomes which are earned during and after the process of production    ·            Households’  income in terms of wages, rent, salaries, interest and dividends    ·            Business/firms  income in the form of retained profits    ·            Government  income in the form of surpluses from state owned enterprises    ·            Net  property income from abroad    ·            Imputed  income from subsistence output.    Note:    A)      When using this  approach, only incomes which are earned in exchange of goods and services  should be included. There should be a quid pro quo i.e. Money should be  received in exchange of a good or service.    B)      All transfer payments  such as gifts, students’ bursaries, old age pensions, unemployment benefits  should be excluded because they are received without exchange. If they are  included, there will be double counting.

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