Measurement of National Income - Product Approach

Product Approach:

According to this method the money value of all the final goods and services will add up to GNP from which capital consumption and net indirect tax (indirect tax - subsidy)are deducted.

N.I = GNP - Capital Consumption - Indirect Tax + Subsidy

where,

GNP = sum of Pi Qi
Qi = Final Goods and Services
Pi = Prices of Qi

Precautions:

1.Avoid double counting.
2.Avoid counting of excluded transactions.