Output with income

We can use the total income of an economy to calculate its output (a.k.a. GDP)!

We are able to calculate GDP (a.k.a. output) of an economy by calculating the total income with the Income Approach.

GDP = Wages & Salaries + Income of Capital (K) + Depreciation + Indirect Business Tax

An economy is equilibrium when its total output (Real GDP [Y]) equals its total income.

In other words, when the value of the goods and services produced by an economy equals the total income earned by its members.

Activate AutoScroll

You haven't unlocked all of ECO 202 yet...

Unlock our 78 concept breakdowns & 230 practice problems with guided solution walkthroughs!