INCOME METHOD EXPENDITURE METHOD

35.         INCOME METHOD
EXPENDITURE METHOD
1.      Meaning
The national income is calculated on the basis of income distributed to the factors of production.

2.      Formula
National Income = Rent + Wages + Interest + Profit



The national income is calculated on the basis of private  and public expenditure on consumption goods/services and on non consumption goods (saving)

National income = Private Consumption and Investment + Public (government) Consumption and
Investment.