Principle of equivalence of three aspects of national income

Principle of equivalence of three aspects of national income



GDP, income, expenditure that three kinds of measures in terms of national income is always consistent.



GDP: the final product value (Y)

Gross Income: The sum of the elements income (wages + capital rent + rent + profits)

Expenditure: Household Consumption + Investment + Government spending + net exports (C + I + G + NX)





GDP = Y = C + I + G + NX = wages + capital rent + rent + profit 







GDP = Total expenditure (Y = C + I + G + NX)



Production and consumption both as to the Y Household consumption Government consumption Investment Net exports, sees the unspent portion of inventory investment. Post-optimal investment in inventory is included in the investment (I) to achieve the end Y = C + I + G + NX.





Gross income = expenditure (wages + capital rent + rent + capital profits = C + I + G + NX)



Expenses of the person who is at the same time, the income of other people. Logically, income and expenditure are consistent.





GDP = Gross Income (Y = wages + capital rent + rent + capital profits)



The payment of wages to workers. It shall pay the rent to the capital. The land to pay the rent. This is the income that each element. Excluding the cost of total factor income from the total product value of the company remains profitable. Profits are included in the income of executives. The combined gross income is the total factor income and the income of the profits of management. The GDP can be calculated by adding the cost of total factor income and profits. Therefore, this is gross income.









Based on Principle of equivalence of three aspects of national income eventually national income equivalent to three sides.