Trusted by millions of Kenyans
LoginRegister
Study resources on Kenyaplex

Get ready-made curriculum aligned revision materials

Exam papers, notes, holiday assignments and topical questions – all aligned to the Kenyan curriculum.

Browse exam papers
Or go directly to:
Class notes Holiday assignments Topical questions Other resources

Identify the approaches to the measurement of national income

Identify the approaches to the measurement of national income

Answers

Dana
(i) Expenditure Approach.
Sum up all the market expenditures by final consumers including the purchases of capital goods by the business community. we include expenditures on final goods and services only.
AE =Y= C + G + I + (X – M)

(ii) Income Approach.
Sum up all the incomes received by individuals and firms. These include; wages, salaries, profits, interests, rents, e.t.c. Payments or earnings for people who do not supply goods or services (transfer payments) are excluded.
Aggregate income(Y) = w + r + i + p

(iii) Product or Output or Value Added Approach.
Add contributions of all individuals at each stage of production to total outputs plus value added of each industry from public, private, and subsistence sectors. We only consider contribution to production for each firm (Net output). The method is also referred to as Value Added Approach.
Dana05 answered the question on July 18, 2019 at 19:42

Answer Attachments

Next: Distinguish between leakages and injections in the economy giving examples

Previous: What are the difficulties involved in the measuring of National Income

View more Economics Questions and Answers  |  Return to Questions Index

Exams With Marking Schemes

Related Questions