Copyright

How can I calculate gross domestic product at market price?

Question:

How can I calculate gross domestic product at market price?

Gross Domestic Product at Market Price

The Gross domestic product at market price is the sum total of all final goods and services at its market monetary value produced in a geographic region at a period of time. The GDP is used to evaluate the growth of any country.

Answer and Explanation:

Gross domestic product at market price can be calculated by three different approaches:

1. Expenditure approach: In expenditure approach the GDP at a market price calculated by the formula

{eq}Y = C + I + G + \left( {X - M} \right) {/eq}

Here Y is GDP at market price, C is consumption, I is investment, G is government expenditure and (X-M) is total Export minus total import.

2. Income approach: In income, approach GDP is calculated as :

{eq}GDP = {\rm{National}}\;{\rm{Income}}(NY) + {\rm{Indirect}}\;{\rm{Business}}\;{\rm{Taxes}} + {\rm{Capital}}\;{\rm{Consumption}}\;{\rm{Allowance}}\;{\rm{or}}\;{\rm{depreciation}}\left( {CCA} \right) + {\rm{Net}}\;{\rm{factor}}\;{\rm{payment}}\;{\rm{to}}\;{\rm{rest}}\;{\rm{of}}\;{\rm{the}}\;{\rm{world}}\left( {NFP} \right) {/eq}

3. Output approach: This approach is also called ?Value Added? method.

{eq}GDP = {\rm{Gross}}\;{\rm{value}}\;{\rm{of}}\;{\rm{output}} - {\rm{Value}}\;{\rm{of}}\;{\rm{intermediate}}\;{\rm{consumption}} {/eq}


Learn more about this topic:

Loading...
Nominal GDP: Definition & Formula

from Introduction to Macroeconomics: Help and Review

Chapter 7 / Lesson 12
80K

Related to this Question

Explore our homework questions and answers library