[4] Aggregate income is a form of GDP that is equal to Consumption expenditure plus net profits.
Most countries compile estimates of their GDP based on guidelines from the United Nations.
It includes salaries of public servants, purchases of weapons for the military and any investment expenditure by a government.
[20] For households, determining the amount of aggregate income generated over the course of a calendar year can be advantageous when calculating the total taxes due for that period.
Businesses can also benefit from the aggregate income model when calculating expenses of various types.
Along with identifying the individual salaries and wages of current employees, the department can also incorporate resources into the budget plan that allow for granting cost of living increases, merit increases, and possibly adding additional personnel during the budget period.
Considering the aggregate income projected for the upcoming operational year allows the business to plan in a manner that ensures it is possible to maintain the right balance in the workforce, while still remaining within budget.
Aggregate income is also important to the calculation of the Gross Domestic Product or GDP of a country.
Calculating the cumulative income of all the entities involved makes it easier to identify true GDP with more accuracy, and thus allow lawmakers to be in a better position to enact legislation that will help make it easier to reach and maintain a balanced budget.
This simple principle of distribution economics helps to create sound financial bases that prepare the group for the future, and make it possible to obtain goals that would have been difficult to achieve if the approach were to consider individual incomes only.