How is the GDP of a country calculated?

by Abhishek Dua in Q n A - Find answers to your questions

772 1.84k 43.3k

13 years ago

A common equation for GDP calculation is: GDP = Consumption + Investment + Exports - Imports. Economists (since Keynes) have preferred to split the general consumption term into two parts: private consumption and public sector spending.

Therefore, the standard GDP formula is expressed as GDP = Private Consumption + Government + Investment + Net Exports (or simply GDP = C + I + G + NX) where C is private consumption or consumer expenditure, I is business investments, G is government expenditure, NX is gross exports - gross imports. For calculation of GDP, net interest expenses in financial sector are added to GDP.

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Gulshan Kumar Ajmani

3.48k 21.9k 176.9k

13 years ago

#101349

GDP or national income is computed either factor method or product method. The computation of GDP given here is on product method. The alternative method called factor method is to sum up income of all nationals. Here also the problem of double counting arises. In both methods, non monetized or barter transactions are problematic. There is another problem. When some one works without remuneration, this is not counted. For example, a lady typist's salary is part of national income of GDP. If she marries the boss, she gets salary no more but the boss turned husband meets all her expenses. Thus her income will be excluded from GDP.

G. K. Ajmani Tax consultant
http://gkajmani-mystraythoughts.blogspot.com/

sarala

384 12.8k 85k

13 years ago

#101675

Thank you for the information abhishek and gulshan kumar

Slow and Steady Wins the Race.

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