Income+and+Expenditure+Approach+to+Measuring+GDP


 * Income and Expenditure Approach to Measuring GDP**

 Income and Expenditure Approach to Measuring GDP   There are Two ways to measuring GDP ( Gross Domestic Product), the Expenditure Approach and the Income Approach.   First the "Expenditure approach"; as the name implies you add up the four forms of expenditures, Which are:  C – consumption spending  I - investment spending  G - government spending on goods and services  X – exports

Consumption Spending: A household expenditure, for example: food, Clothes, Haircuts, New Cars

Investment Spending: is a total of net investments + depreciation.  Then it subtracts spending on Imports (IM) because GDP is the value of Canadian produced goods and services and a portion of investment, government, and consumption spending includes goods purchased from other countries.   C + I + G + X IM   Secondly "Income Approach"; Just simply adds the four types of incomes that flow from the business sector to the household sector together, these incomes are:  w - wages  i - interests <span style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;"> r - rents <span style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;"> π - profits <span style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;"> Adding the total incomes in the economy and adding the total expenditures in the economy are both valid measurements of the value of production. <span style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;"> <span style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;"> w + i + r + n

<span style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;"> Additional Information: <span style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;"> <span style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;"> [|http://www.cliffsnotes.com/study_guide/GDP.topicArticleId-9789,articleId-9733.html] <span style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;"> [|http://www.statcan.gc.ca/nea-cen/about-apropos/iea-crd-eng.htm]



This is graphically showing Canada's and the U.S. % GDP for the last 5 years, and also a forecast as of what they expected for 2010. (this graph as forecasted in September 2008)