Gdp And Total Expenditure On Purchasing A New Houses Essay

904 WordsSep 10, 20144 Pages
1. GDP is the monetary value allocated to all goods and services produced within a given country. This excludes the net income accruing from abroad. GDP can be measured using the total expenditure approach for calculating National Income as a summation of total expenditure on commodities produced in a given economy. Any expenditure on purchasing a new houses is excluded. The final consumption of the government is also included together with all current expenditure. Their expenditure on fixed assets is also included. The value of the physical increase in inventories during the course if the year is also included. The summation of all these components is the Total Domestic Expenditure, TDE. Adding up expenditure on export to the TDE determines the Total Final Expenditure. Subtracting all expenditure on imports from this total results to a measure known as the GDP at market rate. Subtracting taxes on expenditure levied by the government and adding back the total amount of subsidy leads to the arrival at a figure known as GDP at factor cost. National income is however affected by interest, rent and profit accruing from abroad and the net of the property income from abroad ought to be added to the GDP. This leads to the arrival at the GDP at factor cost. GDP can also be arrived at by using factor incomes in the computation of National Income. Under this approach, the summation of individual incomes arrives at the domestic income, as each time something is produced and sold,

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