Answer to Question #248101 in Microeconomics for junaid

Question

What are the three approaches to measuring economic

activity? Why do they givethe answer

Answer 1

The three approaches are:

• Income approach
• Product approach
• Expenditure approach

These approaches give the same answer because they are designed in such a way that an entry based on one approach has an entry in the other approaches with the same value. For instance, when production is done and the output is sold, the production is counted under the product approach, the sales are counted under the expenditure approach and the funds that are received from the sales by the seller are computed under the income approach.