Question

The GDP can be measured using the demand-side expenditures approach and the supply-side incomes approach.

Answer 1

true.

The demand side is expenditure approach to measure GDP. It measures the GDP by adding the expenditure component in each sector.

Y = C + I + G + NX

Where, C = Consumption expenditure by households on goods and services.

I = Investment expenditure by firms on inventory and capital.

G = Government expenditure on infrastructure and various schemes/polices

NX = Net exports which is exports less imports.

The supply side is income method to measure GDP.

The GDP obtained by the sum of all types of income in the country.

• Income from people in jobs and in self-employment (e.g. wages and salaries) + Profits of private sector businesses + Rent income from the ownership of land = Gross Domestic product (by sum of factor incomes)