If consumption is $7 trillion, wages $10 trillion, interest $1 trillion, rental income $1.5 trillion and profits $2 trillion, what is the value of the economy using the income approach?
A) $14.5 trillion
B) $7.5 trillion
C) $21.5 trillion
D) $13 trillion

Question

Quizplus · Accepted Answer

The income approach to measuring the value of an economy is to add up all the income earned by the factors of production. In this case, the factors of production are labor, capital, and land. The income earned by labor is wages, the income earned by capital is interest and profits, and the income earned by land is rental income. Therefore, the value of the economy using the income approach is $7 trillion + $10 trillion + $1 trillion + $1.5 trillion + $2 trillion = $21.5 trillion.

If Consumption Is $7 Trillion, Wages $10 Trillion, Interest $1