Business Finance
How is GDP calculated

Question Description

I need support with this Business question so I can learn better.

How is GDP a measure of both output and income? How is it possible that both measures of GDP - income and expenditure approach - can end up with the same number?

Student has agreed that all tutoring, explanations, and answers provided by the tutor will be used to help in the learning process and in accordance with Studypool's honor code & terms of service.

Final Answer

Gross domestic product (GDP) is the quantitative measure of national income. It represent the all monetary value of goods and services produced with in a nation's geographic borders.

GDP =  Consumption + Govt Expenditures + Investments + Exports - Imports

Three approaches to calculates GDP are gives same results and end up with same number:

1- Expenditure approach: Calculate the final spending of goods and services

2- Product approach: Calculate the market value of goods and services produced.

3- Income approach: Sums the all incomes received by all producers in the country.

all these approaches ultimately doing the same thing which is related to goods and services, if we sum up all expenditures which we incurred on the production of goods and services and if we sell out them and earn income and only if we sum up all our nation income's which we get from our goods and services is also equivalent.

Kindly rate me if you like my answer. Thank you...

Rice University

Return customer, been using sp for a good two years now.

Thanks as always for the good work!

Excellent job


Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors