income approach

income approach

adding total income earned from production of goods within borders of a country in a given year

should have the same result as expenditure approach

income approach formula

GDP = National Income + Net Income of Foreigners - Subsidies + Depreciation

national income

add all households’ income

national income formula

(Y) = P + I + W + R

net income of foreigners

national income of countries citizens, even if they live abroad

net income of foreigners formula

INCOME OF FOREIGNERS LIVING LOCALLY -INCOME OF CITIZENS LIVING ABROAD

govt subsidies

payments made by govr for firms to assist them

firms record them as income

depreciation expenditures

firms do not record income they decide on spending for worn out goods

wear and tear

damage that naturally and inevitably occurs as a result of normal aging

gross national product

total market value of all goods produced by residents of a country, domestic and abroad during a specific time

net income from abroad formula

income of citizens living abroad - income of foreigners living locally

gnp formula

gdp + net income from abroad