Answer to Question #113030 in Macroeconomics for Akansha

Question

Explain income method of measuring GDP. What is the role of statistical diserepancy.

Answer 1

Gross domestic product (GDP) is the value of all the final goods produced within the borders of a country in a given period of time.

Income method is one of the methods used in the determination of a country's GDP. The method estimates GDP by adding all the incomes generated by all the factors of production.

Statistical discrepancy refers to the difference between two values that are expected to be equal. In the context of GDP, the GDP should be the same irrespective of the formula used.

The statistical discrepancy, in the context of GDP, helps us to know the accuracy of the source data used in calculating GDP using the income approach.