Aggregate Output and Income

The aggregate output of an economy is the value of all the goods and services produced in a specified period of time.

The aggregate income of an economy is the value of all the payments earned by the suppliers of factors used in the production of goods and services.

Four broad forms of payments (i.e., income): compensation of employees, rent, interest, and profits.

Compensation of employees includes wages and benefits (primarily employer contributions to private pension plans and health insurance) that individuals receive in exchange for providing labor.

Rent is payment for the use of property.

Interest is payment for lending funds.

Profit is the return that owners of a company receive for the use of their capital and the assumption of financial risk when making their investments.

Aggregate expenditure is the total amount spent on the goods and services produced in the (domestic) economy during the period.

Aggregate Output = Aggregate Income = Aggregate Expenditure