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Gross Domestic Product is a close approximation of: A. national income. B. societal welfare. C....

Question:

Gross Domestic Product is a close approximation of:

A. national income.

B. societal welfare.

C. the consumer price index.

D. the GDP deflator.

E. the current account balance.

The Gross Domestic Product (GDP):

In macroeconomics, the gross domestic product is the value of the total output that is produced in an economy within a given period of time, usually one year. There are various methods that can be used to estimate the gross domestic product, such as the expenditure approach and income approach.

Answer and Explanation:


  • The correct answer is: A. national income.

Using the expenditure approach, the GDP adds up all the expenditures on consumption, investment, and government spending as well as the net exports ({eq}GDP = C + I + G + (X - M) {/eq}). Therefore, gross domestic product is a close estimation of the entire's country income (the national income) in a given period.


Learn more about this topic:

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Gross Domestic Product: Using the Income and Expenditure Approaches

from Economics 102: Macroeconomics

Chapter 4 / Lesson 2
34K

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