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> As such, it also measures the income earned from that production, or the total amount spent on final goods and services (less imports). It's my understanding
by simplotek 4y ago
> As such, it also measures the income earned from that production, or the total amount spent on final goods and services (less imports).
It's my understanding that the "income" interpretation refers to tax income, because each transaction is taxed.
Take a look at your quote. It says it's also the "total amount spent on final goods and services". If you buy bread for 1€ and ham for 1€ and sell ham sandwiches for 6€, no one had income of 8€. At most, the state charged VAT on your 2€ purchases and 6€ sales.
- dragonwriter 4y ago> It's my understanding that the "income" interpretation refers to tax income No, its aggregate income, not tax income. And its not an “interpretation” of GDP, GDP is by design a national income measure, not some other kind of measure with an income “interpretation”.
- maratc 4y agoYou had income of 6€, the bread seller had income of 1€, and the ham seller had income of 1€, so the three of you combined did have income of 8€.
- simplotek 4y ago> (...) so the three of you combined did have income of 8€. The whole point is that that is not income, but just an aggregate value of all transactions within an economy. Money exchanged hands, which is not the same as someone's income.
- ausudhz 4y agoYou're really trying hard to disprove the definition. GDP is the country's income. Full stop is not that hard. Also you're wrong twice, because also the aggregated value of all the transactions of an individual sums up to something that is called income. You're just being pedantic for no reason. I can have many income sources: work, royalty, dividends, rent, selling books etc. To use your analogy the are all transactions with my personal economy (made by myself, one person) and it's called: income