Which of the following statements is true?
A)GDP calculated by income approach is greater than GDP calculated by expenditure approach.
B)GDP calculated by product approach is greater than GDP calculated by expenditure approach.
C)GDP calculated by expenditure approach is greater than GDP calculated by product approach.
D)All three approaches for calculating GDP will result in the same value for GDP.

Question

Quizplus · Accepted Answer

All three approaches for calculating GDP (income, expenditure, and product) should yield the same value for GDP. This is due to the basic formula for GDP: GDP = C + I + G + (X-M), where C is consumption, I is investment, G is government spending, X is exports, and M is imports. The income approach calculates GDP by summing up all income earned in the economy, the expenditure approach calculates GDP by summing up all spending in the economy, and the product approach calculates GDP by summing up the value of all final goods and services produced in the economy. Regardless of which approach is used, the sum of all income, spending, and the value of all final goods and services should be the same, resulting in the same value for GDP.

Which of the Following Statements Is True