Gdp Calculation Techniques
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GDP, or gross domestic product, is the total value of goods and services produced within a country in a given year. There are three main methods to calculate GDP: the product or value added method, which sums the gross value added by each sector of the economy; the income method, which sums factor payments such as wages, interest, rent, and profits; and the expenditure method, which equals total consumption + government spending + investment + net exports in the economy. The document provides examples and formulas to demonstrate how GDP is calculated using each of these three methods.
Gdp Calculation Techniques
- 1. Submitted by- Gaurav Singh Chemical Engg. (3rd yr) 1405251018
- 2. What GDP actually is ????? GDP (gross domestic product) is the sum total of value of good and services created within the geographical boundary of a country in a particular year.
- 3. Calculation of GDP CASE - No government No saving No foreign trade
- 4. CASE - No saving No foreign trade Government
- 5. Ways of calculation of GDP Product Or Value Added Method GDP = GVA1+GVA2+GVA3+. . . . . . .+GVAn GVA = Total value of production(P) - Value of Intermediate goods =>(Total sale + change in inventory) – Value of intermediate goods ORE -> IRON -> STEEL -> CAR 0 1 1 2 2 3 3 4
- 6. Income Method There are four factors of value addition and the economy pays to them different factor payments. Factors of value addition and their respective factor payments- Land Rent(R) Capital Interest(I) Labour Wages(W) Enterpreneur Profit(P) GDP = ∑R + ∑W + ∑I + ∑P
- 7. Expenditure method C = Total consumption expenditure G = Total Govt. expenditure for production of goods & services I = Total investment in the economy X = Exports M = Imports NX = Net Exports GDP = C-Cm +G-Gm+I-Im+X => C+G+I+X-(Cm+Gm+Im) => C+G+I+(X-M) => C+G+I+NX