Explain How GDP Is Measured According to the Expenditure and Income

question 302

Essay

Explain how GDP is measured according to the expenditure and income approaches.

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Definitions:

Unrealized Gain

An increase in the value of an asset that has not been sold yet; hence, the gain is not reflected in the income statement.

Stock Investment

The purchase of shares in a company with the expectation of earning a return in the form of dividends or capital gains.

Dividend

A portion of a company's earnings distributed to its shareholders as a return on their investment.

Short-Term Investments

Financial assets that are easily convertible into cash or are expected to be converted into cash within a short period, usually one year or less.