Question

Why do economists calculate GDP by both the expenditure approach and the income approach?a. economists disagree on the best measureb. the combined methods provide a more accurate measure of GDPc. some economists learned to do it one way and others learned anotherd. these are really just two different names for the same thing

Answer 1

Answer: Option (b) is correct.

Explanation:

Economists are generally using both the methods for calculating GDP because the combined estimates from both the methods provides a more appropriate measure of GDP.

For instance, there is an construction industry and for this industry all the costs incurred before the generation of income. So, expenditure method is more appropriate for this type of industry.

Alternatively, in the service sector income method is more appropriate than the expenditure method.