The Output Approach

The Output Approach focuses on finding the total output of a nation by directly finding the total value of all goods and services a nation produces.

Because of the complication of the multiple stages in the production of a good or service, only the final value of a good or service is included. This avoids an issue often referred to as " d _____c _____" (подвійний обрахунок)–when the total value of a good is included in the national output in s_____ s_____ of p_____ (декілька стадій виробництва). In the example of meat production, the value of the good from the farm may be $10, then $30 from the butchers, and then $60 from the supermarket. The value that should be included in the national output should be $60, not the sum of all those numbers; $100.

The method of National Income by Output, Value Added method:

GDP at market price = Value of Output in an economy in a particular year – Intermediate consumption

NNP at factor cost = GDP at market price – Depriciation + NFIA (net factor income from abroad) – Net Indirect Taxes

The Income Approach

The Income Approach focuses on finding the total output of a nation by finding the total income of a nation. This is acceptable, because all money spent on the production of a good – the total value of the good – is paid to workers as income.

The main types of income that are included in this measurement are r_____ (рента) (the money paid to owners of land), salaries and wages (the money paid to workers who are i_____ in the p_____ p_____ (включені у процес виробництва), and those who provide the natural resources), i_____ (процент) (the money paid for the use of man-made resources, such as machines used in production), and p_____ (прибуток) (the money gained by the e_____ (підприємець) – the businessman who combines these resources to produce a good or service).

The equation for measurement of National Income by Income Method:

NDP at factor cost = compensation of employee + operating surplus + Mixed income of self employee

National Income = NDP at factor cost + NFIA (net factor income from abroad)

The Expenditure Approach

The Expenditure Approach is the most popular n_____ o_____ a_____ m_____ (метод обчислення національного сукупного продукту). It focuses on finding the total output of a nation by finding the total amount of money spent. This too is acceptable, because like income, the total value of all goods is equal to the total amount of money spent on goods. The basic formula for d_____ o_____ (внутрішнє виробництво) combines all the different areas in which money is spent within the region, and then combining them to find the total output.

GDP = C + I + G + (X - M)

Where: C = Household consumption expenditures/Personal consumption expenditures

I = G_____ p_____ d_____ i_____ (валові приватні внутрішні інвестиції)

G = Government consumption and gross investment expenditures

X = Gross exports of goods and services

M = Gross imports of goods and services

Note: (X - M) is often written as N_X, which stands for "Net Exports"