Note 13-- National income

National income is the income earned by people in an economy that measures the money value of the flow of output of goods and services produced within an economy over a period of time(always remember the time) and is generated through the production.
When we measure the national income,we will always talk about 3 accounts--output,spending and income. They are equal when calculating the gross domestic production whcih means the total output produced in an economy over a period of time. Therefore, National Output = National Expenditure (Aggregate Demand) = National Income.
1. Generally,the national income can be counted by C + I + G + (X-M) the same as the aggregate demand. I think it is because the output and income,expengditure are linked to the demand.
2.Income from people employment and in self-employment +Profits of private sector companies +Rent income from land= Gross Domestic product
p.s: Some items can't be included like:
1)Transfer payments are not included because transfer payments are money from one group to the other that will not be produced by production. e.g. the state pension paid to retired people,income support paid to families on low incomes and the Jobseekers’ Allowance .
2)Informal economy: In this economy,most of the economic activities are not legal or avoid the tax registerred to the authority that will attract more consumers and more income.
3.When we are looking at the output in th economy,the value added tax is very influential for that GDP adds together the value of output produced by each of the productive sectors and may cause a decline in output. Value added is the increase in the value of a product at each successive stage of the production process in order to avoid the problems of double-counting the value of intermediate inputs.

Therefore,there are some problems when measure the national income:
1)Statistics will be very complicated that it's difficult to organise and interpret.
2)Informal economy: Some output may be hidden to avoid tax.
3)Home production: Some products are made and consumed by people themselves rather than selling them to earn income,such as vegetables.

Lastly,we can refer to the gross domestic production and gross national production as GNP = GDP + Net property income from abroad ( interest, profits and dividends coming into the UK from our assets owned )