Which of the following is not a method to calculate Gross Domestic Pr...
GDP is the money value of final goods and services produced in a domestic territory of an economy in a given accounting or financial year.
GDP is calculated by following methods-
Income Method- GDP=Rent+ Wages+ Interest+ Profit.
Where rent: from land, wages: from labor
Interest: from capital and,
Profit: from an entrepreneur.
Expenditure Method/Output Method - GDP= C+I+G+(X-M),
where C is the consumer expenditure, I is the investment by firms, G is the Government expenditure, X is the total export and M is the total import.
production MethodOutput Method- GDP=Sum of the final product value.
Hence, the correct option is (d).
Which of the following is not a method to calculate Gross Domestic Pr...
Answer:
The correct answer is option 'D', which states that the value of input is not a method to calculate Gross Domestic Product (GDP) of a country. Let's understand why this option is incorrect by examining the other methods used to calculate GDP.
1. Income Method:
The income method is one of the primary methods used to calculate GDP. It measures the total income earned by individuals and businesses within a country during a specific period. This includes wages, salaries, profits, rents, and interest. By summing up all these incomes, we can derive the total GDP.
2. Expenditure Method:
The expenditure method calculates GDP by measuring the total spending on goods and services within a country during a specific period. It includes four main components: consumption, investment, government spending, and net exports (exports minus imports). By summing up these expenditures, we can determine the GDP.
3. Output Method:
The output method, also known as the production method or value-added method, calculates GDP by measuring the total value added at each stage of production within a country during a specific period. It takes into account the value of intermediate goods and services used in the production process to avoid double-counting. By summing up the value added at each stage, we can calculate the GDP.
4. Value of Input:
The option 'D' suggests that the value of input is not a method to calculate GDP. This is because the value of input refers to the cost of resources used in the production process, such as raw materials, labor, and capital. While the value of input is essential for determining the cost of production, it is not directly used to calculate GDP. GDP focuses on the final value of goods and services produced, rather than the input costs.
Therefore, option 'D' is the correct answer as it correctly identifies that the value of input is not a method to calculate GDP.