Question

Which of the following is NOT a component of GSDP as calculated by the income approach?

• A. Compensation of employees
• B. Operating surplus
• C. Mixed income of the self-employed
• D. Government transfers

Answer 1

Answer:

D. Government transfers

• The income approach sums up the incomes earned from production factors (wages, profits, rent).

• Government transfer payments are a redistribution of income, not an income generated from current production, so they are not included.