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  • Formula Chapter 2 National Income Accounting

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    This document outlines five formulas for calculating national income using the expenditure approach, income approach, and output approach. The expenditure approach formula defines GDP as the total of consumption, investment, government spending, and net exports. The income approach defines GDP as the total of wages, salaries, rents, interest, dividends, and profits. The output approach defines GDP as the total value added by the primary, secondary, and tertiary sectors. All approaches then calculate GNP and national income by adjusting for factors like depreciation.

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    This document outlines five formulas for calculating national income using the expenditure approach, income approach, and output approach. The expenditure approach formula defines GDP as the total of consumption, investment, government spending, and net exports. The income approach defines GDP as the total of wages, salaries, rents, interest, dividends, and profits. The output approach defines GDP as the total value added by the primary, secondary, and tertiary sectors. All approaches then calculate GNP and national income by adjusting for factors like depreciation.

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    Download as docx, pdf, or txt
    28 views1 page

    Formula Chapter 2 National Income Accounting

    Uploaded by

    wong
    This document outlines five formulas for calculating national income using the expenditure approach, income approach, and output approach. The expenditure approach formula defines GDP as the total of consumption, investment, government spending, and net exports. The income approach defines GDP as the total of wages, salaries, rents, interest, dividends, and profits. The output approach defines GDP as the total value added by the primary, secondary, and tertiary sectors. All approaches then calculate GNP and national income by adjusting for factors like depreciation.

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    FORMULA CHAPTER 2 : NATIONAL INCOME ACCOUNTING

    FORMULA EXPENDITURE APPROACH


    1. GDP market Price = Consumption + Investment + Government spending + Net
    Export (Export- Import)

    2. GDP factor cost = GDP market price + subsidies –Indirect taxes

    3. GNP market price = GDP market price + Net Factor @ Properties income from
    Abroad (Factor income received – factor income paid)

    4. GNP factor Cost = GNP market price – indirect taxes + subsidies

    5. National Income = GNP factor cost – Depreciation/Capital consumption

    FORMULA INCOME APPROACH

    1. GDP = Wages + Salaries + Income from rent + interest/dividend + Profit


    2. GNP = GDP + Net Factor @Properties income from abroad (Factor income
    received – factor income paid)

    3. National Income = GNP – Depreciation/ Capital Consumption

    FORMULA OUTPUT APPROACH


    1. GDP market Price = Primary Sector + Secondary Sector + Tertiary Sector

    2. GDP factor cost = GDP market price + subsidies –Indirect taxes

    3. GNP market price = GDP market price + Net Factor @Properties income from
    Abroad (Factor income received – factor income paid)

    4. GNP factor Cost = GNP market price – indirect taxes + subsidies

    5. National Income = GNP factor cost – Depreciation @Capital consumption

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