Summary table - Therefore in order to strike a balance...

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Summary table: Let’s present income and expenditure methods of national income accounting in the form of a summary. But before we do so we have to introduce two adjustment factors which we have not taken account of so far. These are in the form of depreciation charges (D) and indirect taxes (IT). Market prices of goods and services are marked to the extent of indirect taxes and depreciation charges. Therefore these values form part of the aggregate expenditure . But they are not present in the aggregate income under the income method of measurement.
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Unformatted text preview: Therefore in order to strike a balance between the two methods either we have to deduct (D + IT) from the expenditure side or add it to the income side. We have then : Expenditure A/c Income A/c Consumption C Investment I Government Expenditure G Foreign Trade (X- M) Minus [ Depreciation D Indirect Taxes + IT ] Wages W Rent R Profits P Interest i OR Expenditure A/c Income A/c Consumption Investment Government Expenditure Foreign Trade C I G (X-M) Wages Rent Interest Plus [ Depreciation Indirect Taxes W R I D +IT ]...
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