Three methods/approaches to the computation of national income.
Output /product /value added approach
It involves summing up the contributions (value added) of all firms or sectors at each stage of production of final goods and services in the economy. This is done in order to avoid double counting. Value added is the contribution made to the value of the final product at each stage in the production process
Income approach
Here the incomes received by factors of production are added. Such incomes include rent, salaries, wages, interest and profits in a given period usually a year.
National income = wages (w) + rent(r) + interest (i) + profits (p)
Expenditure approach
Here we add up the value spending on all final goods and services. Such expenditures include consumption, investment, government expenditure and net exports in a given period usually a year
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