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Unformatted text preview: 2. With the Expenditure approach, GDP is calculated as: total spending on all final goods and services production in the economy. In other words, it can be written as: Total Expenditure = C + I + G + NX Where C is consumption expenditure, I is investment expenditure, G is government expenditure, and NX is net exports. 3. With the Income approach, GDP is calculated as: the sum of all incomes received by economic agents contributing to production. These incomes include: profits made by firms, wages, salaries, benefits, rental income, corporate profits, net interest, indirect business taxes, and depreciation. All three approaches produce the same GDP total because the total quantity of output, or value added, in the economy is ultimately sold, thus becoming expenditure, and what is spent on all output produced ends up as income, in some kind of form, for someone else in the economy....
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This note was uploaded on 09/25/2008 for the course ECON 160 taught by Professor Baim during the Summer '98 term at UCLA.
- Summer '98