To calculate GDP using the income approach,one of the adjustments made to net domestic product at factor cost is to
A)add depreciation.
B)add investment.
C)subtract investment.
D)add consumption expenditure.
E)subtract indirect taxes less subsidies.

Question

Quizplus · Accepted Answer

To calculate GDP using the income approach, one needs to add all forms of income generated from production, including wages, rental income, interest income, and profits. Depreciation, which represents the loss of value over time of physical capital assets used in production, must also be added back to account for the value of the capital stock used up in production. Therefore, the correct adjustment is to add depreciation.

To Calculate GDP Using the Income Approach,one of the Adjustments