Two equivalent ways to view a closed economy's GDP are as the:
A) total payments made to all workers in the economy or the total profits of all firms and businesses in the economy.
B) total expenditures on all goods produced in the economy or the total income earned from producing all services in the economy.
C) total profits of all firms and businesses in the economy or the total consumption of goods and services by all households in the economy.
D) total income of everyone in the economy or the total expenditure on the economy's output of goods and services.

Question

Quizplus · Accepted Answer

GDP can either be measured as the total income earned by everyone in the economy (i.e. all wages, profits, rents, and interest payments) or as the total expenditure on the economy's output of goods and services. These two methods should yield the same result since every dollar spent on goods and services must ultimately end up as someone's income. Since a closed economy does not have any net exports or imports, total expenditure on goods and services is equivalent to total income earned from producing those goods and services.

Two Equivalent Ways to View a Closed Economy's GDP Are