Output Method of Measuring National Income

National income of a country or GDP of a country is difficult to measure because it is not about income of a single person or community rather it involves aggregating the income of all the people of a country. One of the methods of calculating national incomes is the output method, which in simple words refers to finding out the total value of goods and services produced by a country during a year.

According to output method of measuring national income, national income of a country can be calculated by adding the value of all the final goods and services produced by a country during a particular year. The figures for this sort of calculation can be easily obtained from the tax records submitted by the various companies. It will include all the companies whether it’s manufacturing company or service related companies like banks and financial institutions.

The total of these values will give GDP at factor cost and in that figure if one adds net income from abroad (Income received from abroad – Payments to abroad) one will get gross national income at factor cost. After deducting deprecation from gross national income one will get the figure of national income of a country during a particular year.