Question

How is GDP calculation at the expenditure approach different from the income approach? state the equations and explain them.

Answer 1

ANSWER ::

=> Equations Of Both Methods

-> GDP Expenditure Approach = Consumption + Investment + Government Spending + Net Export (Export - Import)

-> GDP Income Approach = Consumption Of Employees + Rents +Net Interest + Profits + Non-Income Adjustment.

=> Differences ::

As We show That GDP Expenditure Approach and GDP Income Approach. In Expenditure Approach We Consider The Total Expenditure Of Household And Government And also The Net Export. So Expenditure Approach Consider only Expenses. At The Other Hand Income approach Consider Only The Incomes That Is Generated During The Particular Year. So The Basic Difference between Both of The Approach Is That The Expenditure Approach Staring With The Money That Is Spent On Goods and Services. On The Other Hand Income Approach Starts With The Income Earned From The Production of Goods and Services.