How GDP is Calculated With Production Approach

How GDP is Calculated With Production Approach

GDP of a country can be calculated with various approaches and Production Approach is one of them which an economist used to calculate GDP of A country which will represent the Total Production of Final goods and Service Within the Country if you don't know the meaning of GDP then read this "What is GDP? Difference Between GDP Vs GNI " and you will get its meaning so after it you are ready to calculate the GDP with Production Approach.

Production Approach 

Production approach of GDP  focus on Gross Value added which is the total value of the sale minus intermediate cost or Amount of Expense incurred in Production of Good like Raw material, Labor, services cost after deducting from the total output we get Gross Value Added.

Gross Value Added = Gross Value of Output -  Intermediate Consumption

Now this GDV (GDP) is at Factor Cost for Making this GDV (GDP) value at Producer Prices we have to add the indirect taxes (Like GST) and Minus the Subsidies on Products, and we will get GDP at Producer Price.

Gross Value Added At Producer Price: GDP At Factor Prices + Indirect Taxes - Subsidies 

Other Approach to Calculate [Gross Domestic Products]

  1. Income Approach [Click Here]
  2. Expenditure Approach [Click Here]

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