Income Approach Of National Income

National income is the sum of the following components.

Income approach of national income. Total national income is the sum of all salaries and wages rent interest and profits. It includes the income earned by all the factors of production. According to the income approach gdp can be computed as the sum of the total national income tni sales taxes t depreciation d and net foreign factor income f. Sales taxes describe taxes imposed by the government on the sales of goods and services.

A circular flow of income and expenditure exists within an economy where factor income is earned from the production of goods and services and the income is spent on the purchase of produced goods. The income method measures national income from the side of payments made to the primary factors of production in the form of rent wages interest and profit for their productive services in an accounting year.