How To Calculate National Income?


2 Answers

Ellie Hoe Profile
Ellie Hoe answered
National income by output method is calculated in the following manner:

GDP at market price = value of output in a year - intermediate consumption in the economy

NNP calculated at factor cost = GDP at market price - depreciation + NFIA - net indirect taxes

NFIA (net factor income from abroad)

National Income can be also calculated by Income Method:

NDP at factor cost = compensation of workers + calculated operating surplus + mixed income

National income = NDP calculated above + NFIA

Another method to calculate national income is by expenditure approach:

GDP = C + I + G + (X - M)
Where, C = consumption expenses, I = Gross private domestic investment, G = Expenses of Government and (X - M) or "Net Exports".

amber Jhon Profile
amber Jhon answered
Income approach is used for the calculation of National income. The Income Approach determines the national income of a nation to find the total output of the nation. The equation for determining the National Income by Income Method is as follows:

National Income    = NDP at factor cost + NFIA (net factor income from abroad)

NDP at factor cost = compensation of employee + operating surplus + Mixed income of self employee)

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