The output approach focuses on finding the total output of a nation by directly finding the total value of all goods and services a nation produces.
Three strategies have been used to obtain the market values of all the goods and services produced: the product (or output) method, the expenditure method, and the income method. Since what they are paid is just the market value of their product, their total income must be the total value of the product.
Note that all three counting methods should in theory give the same final figure. Personal Income measures the amount of income available to individuals in terms of funds on hand. The actual usefulness of a product (its use-value) is not measured – assuming the use-value to be any different from its market value.
The value that the measures of national income and output assign to a good or service is its market value – the price it fetches when bought or sold. It includes payments made to all resources either in the form of wages, interest, rent, and profits. Therefore, we sum up the total amount of money people and organisations spend in buying things. This avoids an issue often called 'GDP(gross domestic product) at market price = value of output in an economy in the particular year minus GDP at factor cost = GDP at market price minus depreciation plus NFIA NDP at factor cost = Compensation of employees plus net interest plus rental & royalty income plus profit of incorporated and unincorporated NDP at factor cost Net factor income from abroad is added to domestic to final national income.
Arriving at a figure for the total production of goods and services in a large region like a country entails a large amount of data-collection and calculation. However, since an output of one industry may be used by another industry and become part of the output of that second industry, to avoid counting the item twice we use not the value output by each industry, but the value-added; that is, the difference between the value of what it puts out and what it takes in.
It may be described as the ‘national product’ or ‘national income’ or ‘national …
interest on capital, wages to labor, rent for land profit to the stakeholders. Join courses with the best schedule and enjoy fun and interactive classes.
National income is estimated as the sum total of the factor income earned by the normal residents of the country during an accounting year. Also, a correction term must be introduced to account for imports and exports outside the boundary. Measurement of social well-being: alternatives to gross domestic product. National Income Definition.
This amount must equal the value of everything produced. Some total of factor income generated within the domestic territory of a country is called domestic income. National income is equal to GNP less the consumption of fixed capital (i.e., depreciation). The National Income is the total amount of income accruing to a country from economic activities in a years time. Because of the complication of the multiple stages in the production of a good or service, only the final value of a good or service is included in the total output.
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