Question

1- Three approaches in estimating GDP ?

2-List the five components of GDP?

3-why should the government interfere in economy?

4- how Monetary Policy and Fiscal Policy affects the Economy?

Answer 1

Q1) The three approached in estimating GDP are as follows

(1) Expenditure approach: It is the aggregate spending on all the final goods and services in the year within a country.

GDP = C + I + G + NX

(2) Income approach: It is the aggregate of all the primary income in the economy. Income includes income from labor, capital, land and profits.

GDP = W + R + i + P +IBT + D + F

(3) Value-added approach: It is the aggregate of value fo all goods produced in all the sectors in the economy minus the value fo intermediate goods in all the sectors.

GDP = VOGS – IC

Q2) The core 5 components fo GDP are private consumption, government purchases (and consumption), fixed investment, net exports, and change in inventories.