5.2. Income Method

This approach focuses on aggregating the payments made by firms to households, called factor payments. This gives the National Income, defined as total income earned by citizens and businesses of a country.

There are four types of factors of production and four types of factor incomes accordingly i.e. Land, Labour, Capital and Organization as Factors of Production and Rent, Wages, Interest and Profit as Factor Incomes correspondingly.

We need to add indirect taxes, less subsidies and add depreciation to get GDP.