An alternative way to calculate the GDP by looking at the demand side of the products is:

The correct answer is Option 3) Expenditure method

Key Points

• The Expenditure Method calculates GDP by adding up the total expenditure on final goods and services produced within a country during a specific time period.
• The GDP using the Expenditure Method is calculated using the formula: GDP = C + I + G + (X - M), where C is consumption, I is investment, G is government spending, and (X - M) is net exports.
• This method looks at the demand for goods and services, and is particularly useful when evaluating how much money is spent in the economy.
• Other methods of calculating GDP include the Product Method (which focuses on production) and the Income Method (which focuses on income generated from production).

Additional Information

• Product Method
  • Calculates GDP by adding the value added at each stage of production in the economy.
  • This method is also known as the output method and considers the production of all goods and services.
• Value Added Method
  • Involves calculating the value added to a product at each stage of production.
  • The sum of value added at all stages gives the GDP of the country.
• Income Method
  • GDP is calculated by summing the incomes earned by individuals and businesses in the economy.
  • This includes wages, profits, rents, and taxes minus subsidies.
• Key Components of Expenditure Method
  • Consumption (C): Expenditure on goods and services by households.
  • Investment (I): Expenditure on capital goods by businesses.
  • Government Spending (G): Public sector expenditure on goods and services.
  • Net Exports (X - M): Difference between exports (X) and imports (M).