National Income Q6

Ref:
http://www.economicsonline.co.uk/Managing_the_economy/National_income.html

However, it is difficult to calculate everyone's income in a population, so another approach is to calculate total expenditure of every transaction. This relationship is expressed in the national income identity, where the amount received as national income is identical to the amount spent as national expenditure, which is also identical to what is produced as national output. Throughout macroeconomics the terms income, output and expenditure are interchangeable.

What are the uses of National Income?

b) Methods of calculating national income.

1. The income method, which adds up all incomes received by the factors of production generated in the economy during a year. This includes wages from employment and self-employment, profits to firms, interest to lenders of capital and rents to owners of land.
2. The output method, which is the combined value of the new and final output produced in all sectors of the economy, including manufacturing, financial services, transport, leisure and agriculture.
3. The expenditure method, which adds up all spending in the economy by households and firms on new and final goods and services by households and firms.
   An example of its calculation is provided here in a video by Khan Academy. A written synopsis is here.