Explain why GDP can be computed either by measuring spending or by measuring income.
The economy is divided into four sectors: household, business, government, and foreign sector.
All final goods and services are produced using factors of production. By summing up the factor payments, we can find the value of GDP. Some adjustments are required to balance the account.
We can use GDP, a measure of total output, to compute disposable personal income, a measure of income received by households and available for them to spend.