The calculation methods include 1expenditure approach 2incom

The calculation methods include 1expenditure approach 2income approach 3value-added approach. Plz add your explanation.

Please select the GDP calculation method that best fits each of the given definitions. Method 1: This method takes into account payments received by the various factors of production used to produce final goods and services in_ the economy. oods and servicesiSelect nswer Method 2: It is the sum of the market values of its products or services Select answer minus the cost of the inputs used to make the products or services. Method 3: This method is the market value of all the output produced within a nation\'s domestic boundaries within a given period. Select anawerE

Solution

Method 1: this takes into account payments received by the various factors of production used to produce final goods and services in the economy is known as “Income Method”. Since, the payment received by the factor of production is the income of these factors, for example, “wage” is the income of the “labor”, “rent of land” is the income of the land owner etc.

Method 2: it is the sum of the market values of its products or services minus the cost of the inputs used to make the products or services is known as “Value added Method”. Since the market value of all the inputs are also included in the “national income”, that’s why we can’t include the entire market value of the final goods. Only the “difference between the market value of final good and the market value of the input will be taken. If we include both the market value of the “final” as well as “input” then the “market value of the inputs” will be taken twice.

Method 3:this method is the market value of all the output produced within a nation’s domestic boundaries within a given period is known as the “Expenditure Method”. It’s totally easy to understand that “the market value of all the output produced within a nation’s domestic boundaries within a given period” is nothing but the total expenditure of a nation so its represent the expenditure method.