Question : Which of the following is NOT a method to calculate GDP?

Option 1: Income method

Option 2: Expenditure method

Option 3: Output method

Option 4: Savings method

Correct Answer: Savings method

Solution : The correct answer is (d) Savings method.

The savings method is not a method used to calculate GDP. The three commonly used methods to calculate GDP are:

Income method: This method calculates GDP by summing up all the incomes earned by individuals and businesses within a country during a specific period. It includes wages, salaries, profits, rents, and other forms of income.

Expenditure method: This method calculates GDP by summing up the total spending or expenditure on final goods and services within a country during a specific period. It includes consumption expenditure by households, investment expenditure by businesses, government expenditure, and net exports (exports minus imports).

Output method: This method calculates GDP by summing up the value of all final goods and services produced within a country during a specific period. It measures the value added at each stage of production across various industries.

The savings method is not a recognized method for calculating GDP. While savings are an important component of an economy, they are not directly used to measure GDP. GDP focuses on the total value of goods and services produced, income earned, or expenditure made within an economy.