Measuring GDP: Earnings Approach Quiz
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Questions and Answers

What is the equivalent way to measuring GDP mentioned in the text?

  • The cost approach
  • The earnings approach (correct)
  • The factors of production approach
  • The production approach

    • What does the value of a firm's output in the earnings or income or cost approach include?

  • Wages, salaries, rent, interest, taxes, and overhead costs
  • Profits, wages, rent, taxes, and intermediate goods
  • Profits, taxes, depreciation, and net income
  • Wages, salaries, rent, interest, profits, taxes, and depreciation (correct)

    • What does the summation of value added by all firms equal to in the earnings approach?

  • Cost of intermediate goods
  • GDP (correct)
  • Net income
  • Total revenue

    • Why are the earnings and cost approaches considered equivalent for measuring GDP?

    <p>Because both include profits as a component</p> Signup and view all the answers

    What is included in the value of a firm's output in the earnings or cost approach after subtracting the cost of intermediate goods?

    <p>Earnings of factors of production + net taxes + depreciation</p> Signup and view all the answers

    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?

    <p>Value added by all firms</p> Signup and view all the answers

    What does the value of a firm's output in the earnings or cost approach include after subtracting the cost of intermediate goods?

    <p>Earnings of factors of production</p> Signup and view all the answers

    What item is included in the earnings approach that makes it equivalent to the cost approach for measuring GDP?

    <p>Profits</p> Signup and view all the answers

    What is the value that is used to cover all the production costs in the earnings or cost approach to measuring GDP?

    <p>Value of firm's output</p> Signup and view all the answers

    In the earnings or income or cost approach to measuring GDP, what does the summation of value added by all firms equal to?

    <p>GDP</p> Signup and view all the answers

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