The income approach to measuring GDP: adds up all household expenditures to calculate aggregate income and GDP. ignores how income is earned and focuses instead on how it is used. uses the factors payments made by businesses to households to estimate GDP. focuses on how income is spent.

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Business

Camilla George

25 February, 05:16

The income approach to measuring GDP: adds up all household expenditures to calculate aggregate income and GDP. ignores how income is earned and focuses instead on how it is used. uses the factors payments made by businesses to households to estimate GDP. focuses on how income is spent.

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Ryder Schultz · Answer 1

The question is not well formatted.

Here is well arranged one:

The income approach to measuring GDP:

a) adds up all household expenditures to calculate aggregate income and GDP.

b) ignores how income is earned and focuses instead on how it is used.

c) uses the factors payments made by businesses to households to estimate GDP.

d) focuses on how income is spent.

Here is the answer:

c) uses the factors payments made by businesses to households to estimate GDP.

Explanation:

Income approach is one of the approaches of measuring Gross Domestic Product (GDP). Income approach measures GDP with the idea that sum total of all goods and services produced in a country during a particular period should be the aggregate payment made to all factors of production after adjusting for sales, depreciation and transfer payments.

Income to factors of productions are rent to landowners, wages and salaries to labor, interest to providers of capital and profit to entrepreneurs.

All the income will be added and adjustment for transfer payments and depreciation will be made to arrive at GDP.