The fundamental identity of national income accounting is
A)total production = total income - total expenditure.
B)total production = total income + total expenditure.
C)total production = total income = total expenditure.
D)total production = total income/total expenditure.

Question

Quizplus · Accepted Answer

The fundamental identity of national income accounting is that total production (Gross Domestic Product) is equal to total income (Gross National Income) and total expenditure (Gross Domestic Expenditure). This is because all goods and services produced in an economy are either purchased by consumers, government, or businesses (expenditure), or generate income for workers and businesses (income). Therefore, choice C is the correct answer.

The Fundamental Identity of National Income Accounting Is