Why is it true that domestic product and national income must be equal?
A)The IRS national accounting system assures that taxes equal total income.
B)The total amount of spending must equal total national sales.
C)The value of final product must equal the sum of resource income that produced it.
D)The total amount of income earned is eventually spent.

Question

Quizplus · Accepted Answer

Domestic product measures the value of final products produced in a country, while national income measures the income earned by the resources used to produce those products. According to the circular flow of income, every dollar spent on final goods and services is received as income by the resources used to produce those goods and services. Therefore, the value of final products must equal the sum of resource income that produced it, which means domestic product and national income must be equal.

Why Is It True That Domestic Product and National Income