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Total Income? Identify the 3 aggregations of GDP and 18. Why does Total Output Total Expenditure explain what EACH variable i

G: Government Spending NX: Net Exports (Exports-imports) C+I+ G + NX) - the Expenditure aggregation (Y ad C: Consume expendit

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Answer #1

Ans. Total income is the whole of the amount that a firm has earned.

Total expenditure is the whole amount that firm has spent Durning the production process or time.

Total output is the whole amount of production that the firm has made after reducing all kinds of expenses.

Hence, total output =toal income - total expenditure

GDP refers to the monetary value of the total amount of goods and services that all the sectors of an economy has produced over a period of time within the geographical boundaries of that country.

There are 3 methods for GDP calcution:

1. Income method: under this method all the aggregates of income are taken into account and then GDP is calculated.

2. Product method or output method: under this all the value of production is added up and then the GDP is calculated.

3. Expenditure method: under this all the aggregate of expenditure is calculated and then GDP is found out.

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