10 Questions
What is the equivalent way to measuring GDP mentioned in the text?
The earnings approach
What does the value of a firm's output in the earnings or income or cost approach include?
Wages, salaries, rent, interest, profits, taxes, and depreciation
What does the summation of value added by all firms equal to in the earnings approach?
GDP
Why are the earnings and cost approaches considered equivalent for measuring GDP?
Because both include profits as a component
What is included in the value of a firm's output in the earnings or cost approach after subtracting the cost of intermediate goods?
Earnings of factors of production + net taxes + depreciation
In the earnings or cost approach to measuring GDP, what is the equivalent of the sum of all of the earnings of all factors of production?
Value added by all firms
What does the value of a firm's output in the earnings or cost approach include after subtracting the cost of intermediate goods?
Earnings of factors of production
What item is included in the earnings approach that makes it equivalent to the cost approach for measuring GDP?
Profits
What is the value that is used to cover all the production costs in the earnings or cost approach to measuring GDP?
Value of firm's output
In the earnings or income or cost approach to measuring GDP, what does the summation of value added by all firms equal to?
GDP
Test your understanding of the earnings approach to measuring GDP, which involves adding up all earnings of factors of production. This quiz covers concepts such as wages, salaries, rent, interest, profits, taxes, and depreciation.
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