Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

5. An alternative way to calculate the GDP is to compute the value of total income of an economy (known as the income approach). Thus

image text in transcribed
image text in transcribed
5. An alternative way to calculate the GDP is to compute the value of total income of an economy (known as the income approach). Thus the formula would be: GDP - wages + interest + rear + profit Suppose an owner of a rm hires his son as a manager and pays him $X a month. But his son is unproductive at all. Now the owner claims that despite the fact that the rm's output remains unchanged, GDP would still increase by $X by the income approach. Is his argument true or false? Explain

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Macroeconomics

Authors: Robert C. Feenstra, Alan M. Taylor

Fourth Edition

1319061729, 978-1319061722

More Books

Students also viewed these Economics questions

Question

3. Im trying to point out what we need to do to make this happen

Answered: 1 week ago