How does the income approach to measuring GDP compare to the production and expenditure approach to measuring GDP?
A) It is lower, because some of the revenue from selling goods goes back into the production of more goods.
B) It is the same, because all revenues are either payed to workers at the company or to the owners of the company.
C) It is higher, because there are multiple stages along the production process where income is earned.
D) It is higher if the economy is in a time of strong economic growth, and it is lower in times of recession.

Question

Quizplus · Accepted Answer

The income approach to measuring GDP should theoretically equal the production (or output) and expenditure approaches because it accounts for all income earned from production, including wages to workers and profits to owners. This is based on the principle that the value of the total production (GDP) in an economy must equal the total income generated from that production, as well as the total expenditures on the economy's output.

How Does the Income Approach to Measuring GDP Compare to the Production