Gross Domestic Product And Approaches To Calculating GDP

Part 1

Expenditures Approach to Calculating GDP

According to the data that has been presented above, it can be seen that the values for the nominal GDP and the real GDP were different from the year 2013 all the way to 2015. Apart from the GDP values, the other values such as the gross private domestic investment also differed over the years. The value of the gross domestic investments kept on rising in each quarter of the year from 2013 to 2015. The rise in the domestic investment could have been attributed to an increase in return in investments. An increase in returns on investments means that the entrepreneurs get more money to invest in their projects.

Read also How To Calculate GDP of a Country?

The values of the net exports kept on declining for the year 2013 but for the years 2014 and 2015 the values kept on fluctuating from low values to high values. The reason why the net exports values fluctuate might be attributed to the changes in the dollar value. Additionally, the changes in exports could be as a result of the changes in inflation rates between different times.

The table shows that the values of the nominal GDP were greater than that of the real GDP for all the years. The nominal value was greater than real value because of the adjustments that the real value has to go through. For instance, the real GDP value has to go through adjustments for inflation or changes in quantities of goods and services.

Part 2

Income Approach to Calculating GDP

Difference between gross domestic product (GDP) and gross national product (GNP)

GDP and GNP are factors that all measure the values of the goods and services that are produced within a given economy. The difference between them is that GDP measures the domestic production capacities that take place within a given country. On the other hand, GNP measures the production capacity of either an individual or an entity that exists within a given economy.

From the table given above, the value of the GNP can be determined by adding the values of the net income that is earned from the assets that are abroad. Additionally, there will be a need to subtract the amount of money that is used to purchase the foreign assets.

National income is an approach that is used by countries to determine the level of performance of an economy. National income is a measure that provides statistics to show whether a country performs well or experiencing difficulties. For the year 2013, 2014 and 2015, the value of the GNP was higher than that of the NI because NI had to go through adjustments to arrive at the final value. For instance, deductions on the consumption allowance as well as indirect business taxes had to be made first before arriving at the values. Just as has already been mentioned, the deductions have to be made from the value of the GNP in order to obtain the real value of the NI.

Part 3

GDP in Different Countries

The results from the table shows that if a country’s GDP is high and the population size is also big then the value of the Per Capita GDP reduces significantly. On the contrary, if the GDP is high and the population size is small then the value of the Per Capita GDP increases. For instance, the population size of the United States was very small as compared to the size of the GDP thereby resulting in a big value of the per capita GDP.  The table reveals that Qatar has the highest value of per capita while china has the lowest of per capita GDP. In terms of the size of GDP the United States takes position one ahead of China, Mexico and France.  The position in terms of the Per Capita is however taken by Qatar due to the size of the population.

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