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Gross Domestic Product - Essay

Gross Domestic Product

The is one of the important tools used to measure a nation’s productivity and output. It is a “scorecard” that can be used to measure one year’s output against another, or even to compare one nation‘s economic output (as long as the formula’s limitations are recognized) to another’s.
Components of
There are two approaches to : income and expenditure. The income approach adds up the income derived from goods and services produced within the boundaries of a nation: wages and salaries + rent + profits + interest + adjustments. The expenditure approach, which will be the focus of this paper, adds up the sum of the market value of services and goods produced by resources located within the ...

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current measures of Gross Domestic Product is 1987. (McEachern, 168)

Consumption

The model defines consumption as the total annual expenditures for goods and services by households. Examples of this component are groceries, clothing, haircuts, plumbing repairs, and health care, TVs and furniture. Consumption is the largest component in the Gross Domestic Product expenditure model. (McEachern, 154)

Investment

Investment is defined as the annual spending on annual output not used for current consumption. Physical capital, i.e., buildings and new machine, are a large part of this component. (McEachern, 154)

Government Purchases

Government purchases are defined as government consumption of goods and services and gross investment. For instance, the expenditures incurred by government for employee salaries, court expenses, road repairs, etc. It should be added that transfer payments are not included in the definition of government purchases, because they are not ...

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Gross Domestic Product. (2005, June 5). Retrieved November 22, 2024, from http://www.essayworld.com/essays/Gross-Domestic-Product/27993

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PAPER DETAILS

Added: 6/5/2005 01:39:12 AM
Category: Economics
Type: Premium Paper
Words: 647
Pages: 3

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