I.

THREE APPROACHES IN CALCULATING GDP

1. Expenditure Approach
Table 1.

Transfer Payments 50,000,000

Interest Income 200,000,000
Depreciation 76,000,000
Wages 80,000,000
Gross Private Investment 130,000,000
Business Profits 250,000,000
Indirect Business Taxes 100,000,000
Rental Income 125,000,000
Net Exports:
Import 30,000,000
Export 35,000,000
Net Foreign Factor Income 67,000,000
Government Spending 180,000,000
Household Consumption 300,000,000

Compute for the Expenditure Approach.

Expenditure Approach Formula: Y=C+I+G+(X-M)
Y- GDP
C- Household Consumption = 300,000,000
I- Investment = 130,000,000
G- Government Expenditures = 180,000,000
X- Exports = 35,000,000
M- Imports = 30,000,000

Solution:
Y=C+I+G+(X-M)
Y= 300,000,000+130,000,000+180,000,000+(35,000,000-30,000,000)
Y= 300,000,000+130,000,000+180,000,000+5,000,000
Y= 615,000,000
Therefore, Php. 615,000,000 is the Gross Domestic Product

2. Income Approach

Table 2.

Transfer Payments 50,000,000

Interest Income 200,000,000
Depreciation 76,000,000
Wages 80,000,000
Gross Private Investment 130,000,000
Business Profits 250,000,000
Indirect Business Taxes 100,000,000
Rental Income 125,000,000
Net Exports:
Import 30,000,000
Export 35,000,000
Net Foreign Factor Income 67,000,000
Government Spending 180,000,000
Household Consumption 300,000,000
Compute for the Income Approach.
Income Approach Formula: GDP = national income + depreciation + (indirect taxes – subsidies) + net
factor income from the rest of the world + other GDP

NI=Wages+Rental Income+Interest Income+Business Profits

NI=80,000,000+125,000,000+200,000,000+250,000,000
NI=655,000,000

National Income= 655,000,000

Depreciation= 76,000,000
Indirect Taxes= 100,000,000
Net Factor Income=67,000,000

Solution:

GDP=national income + depreciation + (indirect taxes – subsidies) + net factor income from
the rest of the world + other GDP
GDP=655,000,000+76,000,000+100,000,000+67,000,000
GDP=898,000,000
Therefore, Php 898,000,000 is the total Gross Domestic Product

3. Value Added Approach

The total output of the clothing industry was worth 5 billion pesos and 1 billion pesos worth of
material inputs used to produce the clothes. Find the total Gross Domestic Product.

Value of output= 5,000,000,000

Intermediate Consumption= 1,000,000,000

Solution:
Value Addition = Value of Output-Intermediate Consumption
= 5,000,000,000-1,000,000,000
= 4,000,000,000
Therefore the GDP is amounted to Php 4,000,000,000.

II. PER CAPITA

1. Per Capita GNP = GNP/Popuation

Consumption= 3,300,000,000
Investment= 130,000,000
Government Spending= 1,180,000,000
Net Exports= 35,000,000
Net Income= 30,000,000
The total population of Filipinos in the Philippines is 109,600,000.

Solution:
GNP= C+I+G+X+M
GNP=3,300,000,000+130,000,000+1,180,000,000+35,000,000+30,000,000
GNP= 4,675,000,000

Per Capita GNP= GNP/Population

Per Capita GNP= 4,675,000,000/109,600,000
Per Capita GNP= Php 42.66
2. Per Capita GDP = GDP / Population

Consumption= 3,300,000,000
Investment= 130,000,000
Government Spending= 1,180,000,000
Net Exports= 35,000,000
Net Income= 30,000,000
The total population of Filipinos in the Philippines is 109,600,000.

Solution:
Y=C+I+G+(X-M)
Y= 3,300,000,000+130,000,000+1,180,000,000+(35,000,000-30,000,000)
Y= 3,300,000,000+130,000,000+1,180,000,000+5,000,000
Y= 4,615,000,000

Per Capita GDP=GDP/Population

Per Capita GDP=4,615,000,000/109,600,000
Per Capita GDP= Php 42.11