All You Need T o Know To Understand National Income

 GDP is calculated by adding up the value of all goods and services produced within a country over a given period. For example, if a car manufacturer produces 1,000 cars worth $20,000 each in a year, the total value of the cars produced is $20 million.The same goes for services, such as the cost of a haircut or medical treatment.

 However, national income can also be calculated by adding up the incomes earned by individuals and businesses in an economy. This is called the National Income Method. It includes wages and salaries, profits, rent, and interest earned.

 For example, if a person earns a salary of $50,000 per year, and a business earns profits of $100,000 per year, the total earned income is $150,000.

National income can also be measured by the expenditure method, where the total spending in an economy is considered. It includes the consumption spending by households, government spending, investments, and foreign expenditure. 

For example, if a household spends $10,000 on groceries, a government spends $5,000 on building a road, a business invests $20,000 in its production, and foreign tourists spend $50,000 in the country's tourism industry, the total expenditure in the economy would be $85,000.

In conclusion, national income is an important economic indicator that measures the value of goods and services produced within a country in a given period. It can be calculated using GDP, National Income, or by expenditure methods. The calculation of national income helps governments and analysts understand the overall health of the economy and can be used to make policies to improve it.