Question

Suppose one has data for the following categories: net interest, government spending, corporate profits, net exports, gross private domestic investment, rental income, and personal consumption expenditures. Which measure of GDP can be calculated?

Answer 1

Answer:

Expenditures approach

Explanation:

Under  expenditures approach:

GDP = C + I + G + NX

Where,

GDP = Gross Domestic Production

C = Personal Consumption - household spending

I = Private Investment

G = Government Consumption and investment

NX = Net Exports(Total export - Total import)

Under the Income approach:

GDP = Wages + Compensation of employees + Rents + Profits + Interest + Indirect business taxes + Depreciation

Note: Sufficient data is not provided for the Income approach so, GDP is calculated under the expenditures approach.