what points are to be considered while estimating gross domestic product?
Answers
Answer:
Answer: The final value of goods and services produced or rendered in a country in a year is taken into account for calculating GDP. The only services which are not included in calculating GDP is the work done by a housewife at home , since it doesn't involve any monetary transaction.
Explanation:
Gross Domestic Product is the total production of goods and services within the economic territory of the country for a specified time.
1. It is calculated for finished and final goods and services.
2. GDP = C + I + G + (X – I) this is the formula through which GD is calculated.
3. C is consumption, i.e. the money spent on the consumption of food, rent, jewelry, etc.
4. I am Investment, i.e., This includes construction of a new mine, purchase of software, or purchase of machinery and equipment for a factory. Spending by households (not government) on new houses is also included in Investment.
5. G is Government spending, i.e., the sum of government expenditures on final goods and services. It includes salaries of public servants, purchase of weapons for the military, and any
6. X is export it is the goods or services produced for consumption of other nations.
7. I is Import it is the goods and services purchased from other nations.