The income approach to calculating GDP is:
A) more accurate than the expenditure approach to calculating GDP.
B) less accurate than the expenditure approach to calculating GDP.
C) the same as the expenditure approach to calculating GDP.
D) simpler to carry out than the expenditure approach to calculating GDP.

Question

Quizplus · Accepted Answer

The income approach to calculating GDP should theoretically yield the same total as the expenditure approach because both methods are just different ways of measuring the same economy's output. The income approach sums up total national income, including wages, rents, interest, and profits, while the expenditure approach sums up total spending on the nation's final goods and services. Both should arrive at the same GDP figure because every dollar spent on a product (expenditure) translates into income for someone else.

The Income Approach to Calculating GDP Is