The income approach to calculating GDP:
A) is more accurate than using the expenditure approach.
B) is less accurate than using the expenditure approach.
C) will generate the same answer as using the expenditure approach.
D) is simpler to calculate than the expenditure approach.

Question

Quizplus · Accepted Answer

The income approach and the expenditure approach should theoretically generate the same answer if calculated correctly. The income approach calculates GDP by adding up all of the incomes earned by individuals and businesses in an economy, while the expenditure approach calculates GDP by adding up all of the spending on goods and services in an economy. While the income approach may be more complex to calculate, it is not necessarily more accurate than the expenditure approach.

The Income Approach to Calculating GDP