National Income

To help us understand the division of total income among the different factors of production, we construct data on national income (XI). NI represents the total incomes received by labor, capital, and land. It-is constructed by subtracting depreciation and indirect taxes from GI National income equals total compensation of labor, rental income, net interest, income of proprietors, and corporate profits.

The relationship between GDP and national income is shown in the first two bars of Figure 21-4. The left-hand bar shows GDP. while the second bar shows the subtractions required to obtain Nl.

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