The method obtained by adding all the reward of factors of production in national income is________

1. Analyze the question The question asks for the method of measuring national income that works by adding up the rewards of the factors of production. Those rewards are:

• Wages and salaries (reward for labour)
• Rent (reward for land)
• Interest (reward for capital)
• Profit (reward for entrepreneurship)

2. Explain the concept There are three standard ways to measure national income:

| Method | What it does | |---|---| | Income approach | Adds up all incomes earned by factors of production (wages + rent + interest + profit) | | Expenditure approach | Adds up all spending on final goods and services (C + I + G + (X − M)) | | Output (value added) approach | Adds up the value of goods and services produced, or the value added at each stage of production |

3. Solution

• Adding up rewards to the factors of production means adding up the incomes earned by households and firms for supplying land, labour, capital and enterprise.
• This is exactly the income approach.
• B (expenditure) sums spending, not factor rewards.
• C (value added) and D (output) both measure the value of production, not the incomes paid out.

4. Answer The correct option is A. income approach.

5. Exam tip Match each method to its keyword:

• Income → factor rewards (wages, rent, interest, profit)
• Expenditure → spending (C + I + G + X − M)
• Output / Value added → production at each stage

If the question mentions "rewards", "earnings" or "factor incomes", think income approach.