How can I write an essay about the income approach to GDP?
How to write this essay depends a great deal on what the exact question is. If you are just trying to describe the income method/approach to measuring GDP, you should be sure to include the following points:
- GDP is often measured by consumption, but income can be used too. This is because for every dollar spent by a consumer, a dollar must be earned. The dollar that is spent becomes income for someone else. Therefore, measuring income works as a way to measure GDP.
- The most important thing is to be sure that all forms of income are measured. It is necessary to measure the wages that workers own, of course. However, we must also be sure to measure income that comes to people and companies in the form of rents, interest payments, and profit gained by the owners (including shareholders) of businesses.
These are the basic facts about measuring GDP through the income method.