Professional Documents
Culture Documents
How is it measured?
At the macro level, from national accounting perspective, it is the sum of a country’s GDP and net of subsidies and
taxes in the economy. When measured from the production side, it is a balancing item of the national accounts.
What is GDP?
It gives the economic output from the consumers’ side. It is the sum of private consumption, gross investment in the
economy, government investment, government spending and net foreign trade (difference between exports and
imports).
Which of the two measures is considered more appropriate gauge of the economy?
A sector-wise breakdown provided by the GVA measure helps policymakers decide which sectors need incentives or
stimulus and accordingly formulate sectorspecific policies. But GDP is a key measure when it comes to making cross-
country analysis and comparing the incomes of different economies.