4. The difference between expenditure and income approach to measure GDP resides in: A) Expenditure approach...
4. The difference between expenditure and income approach to measure GDP resides in:
A) Expenditure approach address the question “Who gets income”, while income approach “Who purchases GDP”
B) Expenditure approach counts compensation of employees, rents, interest, proprietor’s income and corporate profit, while income approach counts consumption, investment, government spending and net export
C) From the spending side 70% of national income is paid in wages and benefits, while from income side 72% consists of consumer expenditures
D) The expenditure approach values goods at market prices and measures gross product, while income approach values goods at factor cost and measure net product, the difference being amount of indirect taxes (sales taxes) and subsidies.
Homework Answers
4.
Ans: D.
Explanation: Expenditure method focus on expenditure on final output and hence, measures output at market price whereas income method calculates factor incomes and hence, measures output at factor costs.
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4. The difference between expenditure
and income approach to measure GDP resides in:
A) Expenditure approach...
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Problem #1 GDP calculated by the expenditure approach will b income approach, because OA. the dollar value of the expenditure on new goods and services in a year must be equal to he GDP calculated by the the dollar value of the income generated in that year the dollar value of the expenditure on new goods and services in a year is always less than the dollar value of the income generated in that year, since imports are subtracted from...
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1.There are two approaches to measuring gross domestic product (GDP), expenditures approach and income approach. Expen...
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8. The income approach The following table shows macroeconomic data for a hypothetical country. All figures...
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8. The income approach The following table shows macroeconomic data for a hypothetical country. All figures...
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Question 2: 2.1 Below is a list of domestic output and national income figures for a given year. Calculate the national income level (GDP) by using the expenditure approach. (2) R245 » Personal consumption expenditures Net foreign factor income Rents Consumption of fixed capital Social contributions • Net exports Dividends Compensation of employees Undistributed corporate profits Personal taxes Corporate income taxes Corporate profits . Government purchases . Net private domestic investment Personal saving 2.2 Graphically illustrate the two components of...
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