Questions: GDP measures production in the economy. In what way is measuring production the same as measuring income in the economy?

The answer is the first one: All production results in income - profits, wages, etc., for someone in the economy.

Explanation:

1. All production results in income - profits, wages, etc., for someone in the economy.
   This statement is correct. In the economy, the value of goods and services produced (GDP) is equal to the total income generated from that production. This is because the production process involves paying wages to workers, generating profits for businesses, and paying rents and interest to capital owners. Therefore, measuring production is inherently the same as measuring income, as every unit of production corresponds to an equivalent amount of income distributed among the factors of production.

2. Everything that is produced is sold.
   This statement is not necessarily true. While it is generally assumed in economic models that all production is sold, in reality, some goods may remain unsold or become part of inventories. Therefore, this statement does not directly explain why measuring production is the same as measuring income.

3. The government receives all income from production.
   This statement is incorrect. While the government does receive some income from production in the form of taxes, it does not receive all income. Income from production is distributed among various entities, including workers (wages), businesses (profits), and capital owners (interest and rent), with only a portion going to the government.

In summary, the equivalence between measuring production and measuring income in the economy is based on the fact that all production generates income for someone, making the first statement the correct explanation.