Question
The expenditures and income approaches to GDP are expected to yield identical results because goods that are not sold in one year will be sold in some following year.
True
False
True
False
Answers
GPT-4o mini
False
The expenditures and income approaches to GDP may not yield identical results because they account for different aspects of economic activity. The expenditures approach calculates GDP by summing up consumption, investment, government spending, and net exports, while the income approach calculates GDP by summing up all incomes earned in the production of goods and services, such as wages, rents, interests, and profits. Goods that are not sold in one year may still be accounted for in the expenditure approach through inventory investment, but they might not affect income until they are sold, creating potential discrepancies between the two methods.
The expenditures and income approaches to GDP may not yield identical results because they account for different aspects of economic activity. The expenditures approach calculates GDP by summing up consumption, investment, government spending, and net exports, while the income approach calculates GDP by summing up all incomes earned in the production of goods and services, such as wages, rents, interests, and profits. Goods that are not sold in one year may still be accounted for in the expenditure approach through inventory investment, but they might not affect income until they are sold, creating potential discrepancies between the two methods.