The appropriate formula for computing Gross Domestic Product using the income approach (excluding depreciation and indirect income taxes) is
A) consumption + investment + government spending + net exports.
B) wages + rent + interest + profits.
C) wages + rent + interest + profits + indirect business taxes.
D) wages + rent + interest + profits + indirect business taxes + depreciation.

Question

Quizplus · Accepted Answer

The income approach to calculating Gross Domestic Product (GDP) involves adding up all the incomes earned during a given period, rather than adding up the value of all final goods and services produced. The appropriate formula for computing GDP using the income approach is wages + rent + interest + profits, which includes all forms of income earned from the production of goods and services. It excludes indirect taxes and depreciation since these are already included in the prices of the final goods and services.

The Appropriate Formula for Computing Gross Domestic Product Using the Income