Answer to Question #129716 in Macroeconomics for Zubair

Question

what will be the gdp of the income is 1 million

Answer 1

Answer: GDP = 1 million

Explanation

Gross domestic product (GDP) is a primary measure of national income. GDP is the total market value of output produced in an economy during a given period of time, usually a year, and this value is an estimate of national income.

Considering that there are three approaches to measuring GDP, namely the output approach, the expenditure approach, and the income approach, it becomes clear that GDP = National Output = National Expenditure = National Income.

Thus, the income approach to GDP computation provides GDP as the sum of incomes earned through the production of goods and services. GDP = personal incomes + profits from investments + Rental incomes from land ownership + interest incomes from capital ownership.

Hence, we conclude that GDP is the same as national income, for GDP is a measure of national income. Thus, when national income is 1 million, then GDP is also 1 million.