Types of Approaches for Calculating NI : National Income

There are three (3) Types of Approaches for Calculating National Income: these three Approaches are :

• Output Approach
• Income Approach
• Expenditure Approach

Income Approach :
By accumulating the income of the factors of production – land, labor, capital and organization - income approach calculate national income.

The income of the factors of production is called as :

The income of land is called Rent.
The income of labor is called Wage.
The income of capital is called Interest.
The income of organization is called Profit.

Formula :
Y= Wages for labour + Rent on land + Interest on capital +Profits for entrepreneurship

By accumulating these incomes, national income is calculated in Income Approach.



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