Measurement of National Income (Income approach)
National income may be defined as the sum of income of all individuals in a country in a period of time whereas individual income may be defined as monetary value of his/her earnings from productive activities. In other words, national income is defined as sum of income paid to/received by various factors of production in a country in a period of time. National income includes the following attributes: Wages, salaries, commission, bonus and other form of compensation to workers before deduction of tax and social security contribution. Net income from rent and royalties earned by fixed factors of production. Net interest income from any type of services Profit of partnership and proprietorship before deduction of tax Income from nonprofit making activities. Summation from the above five points gives us Total Personal income Total personal income + Undistributed profits of private business organization = Total Private Income Total Pr...