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Sagot :
To calculate GDP using the income approach, economists use total national income, sales tax, depreciation and net foreign factor income.
Gross domestic product is all the products that a country produces within a given period.
Types of Gross domestic product
- Nominal GDP: it is GDP determined using the prices in the given year.
- Real GDP : it is GDP that has been adjusted for inflation.
Methods of calculating GDP
- Income approach: this approach calculates GDP by adding the total income earned by the various factors of production.
The equation that represents GDP using the income approach is: GDP= Total national income + sales tax + depreciation + net foreign factor income.
- Expenditure approach: GDP is the sum of consumption spending, government spending, net export and business spending.
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