Which of the following correctly describes GDP using the income approach?

A) GDP = Consumption + Gross Investment + Net Exports + Government Purchases

B) GDP = Wages + Rents + Interest + Profits and Losses + National Income

C) GDP = Wages + Rents + Interest + Profits and Losses

D) GDP = National Income + Indirect Business Taxes + Depreciation + Net Foreign Factor Income

Question

Business

Beanpole

24 July, 12:33

Which of the following correctly describes GDP using the income approach?

A) GDP = Consumption + Gross Investment + Net Exports + Government Purchases

B) GDP = Wages + Rents + Interest + Profits and Losses + National Income

C) GDP = Wages + Rents + Interest + Profits and Losses

D) GDP = National Income + Indirect Business Taxes + Depreciation + Net Foreign Factor Income

+2

Answers (1)

Know the Answer?

Noah Heath · Answer 1

The correct answer is D) GDP = National Income + Indirect Business Taxes + Depreciation + Net Foreign Factor Income.

Explanation:

The GDP by the income approach is the sum of the Compensation of Employees or payment to workers; Gross Operating Surplus or remuneration to capital (to capital owners); Mixed Income or compensation that does not differentiate the payment to the worker and the capital (for example, self-employed workers); and, taxes less subsidies on production and imports or Net Taxes on products that correspond to the Government.