Which of the following items is not included in the measurement of the national income using the income approach

Analyze the question: We are asked which item is NOT part of national income when it is measured using the income approach.

Concept: National income can be measured in three ways:

1. Income approach: adds up all incomes earned by factors of production: wages and salaries (labour), rent (land), interest (capital), and profits/dividends (entrepreneurship).
2. Expenditure approach: adds up all spending on final goods and services: C + I + G + (X − M). Government purchases belong here.
3. Output approach: adds up the value added by all sectors.

Solution:

• A. Wages and salary: income to labour, so it is included.
• B. Government purchases: this is spending (the "G" in the expenditure approach), not a factor income, so it is not included in the income approach.
• C. Interest: income to capital, so it is included.
• D. Dividend: a share of profit paid to shareholders (the return to entrepreneurship), so it is included.

Answer: B. Government purchases.

Tip: Remember that the income approach is about what people earn (wages, rent, interest, profit). Items like consumption, investment, and government purchases are spending items and belong to the expenditure approach. If you see "G", "C" or "I", think expenditure, not income.