Question

Which of the following is a way to compute GDP? a. total income earned. b. total...

Which of the following is a way to compute GDP?

a.

total income earned.
b.

total expenditures on final goods.
c.

add up the market values of all final goods and services.
d.

All of the above are correct.
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Homework Answers

Answer #1

d. All of the above are correct

Explanation:

What is spent on a product is the income to those who helped to produce and sell it. Therfore it can be calculated either by income or by expenditure approach.

Mainly there are three aproaches to calculate GDP

1) Expenditure Approach = Consumption + Investment + Government Spending + (Exports - Imports)

2) Income Approach = Total National Income + Sales Tax + Depreciation + Net Foreign Factor Income

3) Output Approach or net product or value added approach = It is the difference between Value of Good as they leave a stage of production to another and the cost of that good as they entered that stage.

Value added = Value of Output - Intermediate Consumption

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