Answer: Income earners generate income, while income spenders contribute to the overall economy by spending that income on goods and services, which, in turn, helps in calculating the national income and GDP.
Step-by-step explanation:
1. Income Earners: These are individuals or entities that earn income by providing goods and services, or through various sources like wages, salaries, profits, rent, interest, and dividends. In the context of national income accounting, income earners include households, businesses, and the government. The total income earned by these entities is a critical component of the national income.
2. Income Spenders: Income spenders, on the other hand, refer to the same entities (households, businesses, and the government) that spend the income they earn on goods and services. In national income accounting, the total expenditure by these entities is used to calculate the Gross Domestic Product (GDP) through the expenditure approach, one of the three methods used to measure a nation's economic output.