How do you calculate GDP?
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01-22-2013, 01:26 AM
Post: #1
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How do you calculate GDP?
How do you calculate the gdp given the following
gross private domestic investment: 46 exports of the U.S. 9 disposable income: 190 Personal savings: 10 Government Purchases: 84 Net Foreign Factor Income Earned in the US: 10 Consumption of fixed capital: 52 dividends: 13 Imports of the US: 12 Indirect business taxes: 22 Personal taxes: 38 Social security contributions: 23 I know that the answer is 255, I need an explanation as to why it is 255. thanks! Ads |
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01-22-2013, 01:34 AM
Post: #2
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GDP is the value of all the goods produced by a country in a given time period (usually a year).
It is calculated in three ways.. 1) adding the value of all the products produced during a year 2) adding all the incomes (of private and personal) 3) adding all the expenditures (personal, private, corporate and government) All the three would be equal.. Here we have to use both the methods to calculate the GDP.. Expenditure method + C,Private Consumption Expenditures + I, Private investment + G, Government Purchases + NX ( Exports-Imports) Net Exports ========================== =GDP ______________________________ We have I=46 G=84 NX=9-12= -3 We don't have C But we know that, Consumption Expenditures, C = Disposable Income, DI - Personal Savings, S C=DI-S C=DI-10 Disposable Income = Personal Income-Personal Taxes DI = PI - 38 We have it given DI = 190 C=180 GDP = C+I+G+NX = 180 + 46+ 84 - 3 = 307 NDP, Net Domestic Product = GDP-Consumption of Fixed capital (Depreciation) NDP=307-52 NDP= 255 [What you mention is not GDP but NDP] I have the complete scheme of calculation below...once again.. +190 DI, Disposable income - 010 Personal Savings _______________________________________ = 180 C, Personal Consumption Expenditures + 046 I, Gross private domestic investment + 084 G, Government Purchases - 003 NX (Exports-Imports) _______________________________________ + 307 GDP, Gross Domestic Product - 052 Consumption of fixed capital _______________________________________ + 255 NDP, Net Domestic Product + 010 Net foreign factor income _______________________________________ = 265 NNP Net national product @Factor Costs - 022 Indirect business Taxes _______________________________________ = 243 NNP Net national product @Market costs or National Income, NI Ads |
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