National Income Accounting- the Three Approaches
THE INCOME APPROACH: This approach measures theincome of the individuals from employment and from self-employment, the profits of firms and public sectorenterprises and rent on property. ( Interest earnings willbe included within the profits of companies or the incomeof individuals.)C) THE VALUE ADDED or OUTPUT APPROACH: Thisapproach is to measure the value added by all activitieswhich produce goods and services, that is their netoutput in the period.NOTE:
All the three approaches will in theory result in the same total amount of economic wealth created in the period which is called NATIONAL INCOME.