2 ways of calculating GDP
Expenditure Approach (spend)- add up all the spending on final goods and services produced in a given year Formula- GDP = C+Ig+G+Xn(Exp-Imp)
note-same answer added together
Income Approach (verbal admission to income [not used much])- to add up all of the income that resulted from selling all final good and services produced in a given year Formula - W(wages)+R(rents)+i(intrest)+P(profits)+Statistical adjustments
Compensation of Employees-includes wages, salaries, fringe benefits, social security contributions, and health and pension plans.
Rents- income of all the property owner
Interest- income from investments
Corporate Profits- income of the corporations stock holders
Proprietors Income- income of entrepreneurs or partners
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