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There are three generally accepted ways to calculate GDP: Product approach: adding up the market values of all goods/services nal. Expenditure approach: adding up the total expenditure of di erent sectors of the economy. Income approach: adding up the income generated by the production of nal goods/services.
Computing GDP through Production • Calculate nominal GDP by adding value of production of all industries: production surveys. • Problem of double-counting: i.e. USX and GM. • Value Added=Revenue−Intermediate Goods. • Nominal GDP=Sum of Value Added of all Industries. 6
1 Μαΐ 2017 · This paper explores value concept and defines utility function with incorporation with value and price. From this value concept, the value added method is used for GDP measurement...
Value added approach Add to GDP only the value added at each step: 1.Sheep rancher: $120 2.Wool processor: $180 - $120 = $60 3.Suit manufacturer: $200 - $180 = $20 4.Wholesaler: $250 - $200 = $50 5.Retailer: $350 - $250 = $100 Add up the value added at every stage of production: $120 + $60 + $20 + $50 + $100 = $350 What’s not counted?
GDP measures the monetary value of final goods and services—that is, those that are bought by the final user—produced in a country in a given period of time (say a quarter or a year). It counts all of the output generated within the borders of a country.
Key Formulas in Macroeconomics. GDP = C + I + G + Xn: The expenditure approach to measuring GDP. GDP = W + I + R + P: The income approach to measuring GDP. Calculating nominal GDP: The quantity of various goods produced in a nation times their current prices, added together.
the GDP expenditure equation [GDP = C + I + G + (X – M)] to understand the relationships among the variables and the effect of changes in aggregate spending on GDP. Special attention
