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Mercado, Chamille B.
Moreno, Krizzia Lynn O.
Pilar, Hazell Mea E.
4T3
4/9/2015
1. Expenditure Approach
2. Production Approach
3. Income Approach
For example, if prices rose 2.5% since the base year, the deflator is
1.025. If the nominal GDP were 10 million, the real GDP would be
976,000 or 10,000,000/1.025 = 976,000.
Expenditure Approach
adds up the value of purchases made by final users
GDP = C + G + I + NX
where:
"C" is equal to all private consumption, or consumer
spending, in a nation's economy
"G" is the sum of government spending
"I" is the sum of all the country's businesses spending on
capital
"NX" is the nation's total net exports, calculated as total
exports minus total imports
(NX = Exports - Imports)
Production Approach
sums the value-added at each stage of production, where
value-added is defined as total sales less the value of
intermediate inputs into the production process
For example, flour would be an intermediate input and
bread the final product; or an architects services would be
an intermediate input and the building the final product
This approach mirrors the OECD definition:
Estimate the gross value of domestic output out of the many various
economic activities
Determine the intermediate consumption,
i.e., the cost of material, supplies and services used to produce final goods or
services.
4/9/2015
Production Approach
Income Approach