output approach

(noun)

GDP is calculated using the output approach by summing the value of sales of goods and adjusting (subtracting) for the purchase of intermediate goods to produce the goods sold.

Related Terms

Examples of output approach in the following topics:

  • Calculating GDP

    • GDP can be calculated through the expenditures, income, or output approach.
    • However, another approach referred to as the "output approach" calculates GDP by evaluating the value of all sales and adjusting for the purchase of intermediate goods (to remove double counting).
    • The most well known approach to calculating GDP, the expenditures approach is characterized by the following formula:
    • The output approach is also called "net product" or "value added" method.
    • Net value added = Gross value of output – Value of intermediate consumption.

  • Learning from GDP

    • GDP can be evaluated by using an output approach, income approach, or expenditure approach.
    • The output approach focuses on finding the total output of a nation by directly finding the total value of all goods and services a nation produces.
    • The income approach equates the total output of a nation to the total factor income received by residents or citizens of the nation.
    • The expenditure approach is basically an output accounting method.
    • The basic formula for domestic output takes all the different areas in which money is spent within the region, and then combines them to find the total output .

  • National Income

    • A variety of measures of national income and output are used in economics to estimate total economic activity in a country or region.
    • The output approach focuses on finding the total output of a nation by directly finding the total value of all goods and services a nation produces:
    • The income approach equates the total output of a nation to the total factor income received by residents or citizens of the nation:
    • The expenditure approach focuses on finding the total output of a nation by finding the total amount of money spent and is the most commonly used equational form:
    • The expenditure approach is a common method for evaluating the value of an economy at a given point in time.

  • Calculating Economic Growth

    • In economics, economic growth refers to the growth of potential output.
    • There are three approaches used to determine the GDP:
    • Product (output) approach: adds together the outputs of every class of enterprise to provide the total.
    • In principle, all of the approaches should yield the same result for the GDP of a country.
    • For example, the equation for the expenditure approach is: GDP = C + I + G + (X - M).

  • The Allocation Problem

    • There are three possible approaches to the narrow allocation problem.
    • A second approach is to alter the mix (relative amounts) of goods and services produced, so that more highly valued goods are produced by reducing the output of lower valued goods.
    • And the output of good X would be QX = QXA+QXB+ . . .
    • The second approach is to increase the output of goods that individuals value most and reduce the output of goods that are less desirable.
    • Religious groups often take this approach.

  • Graphical Representations of Production and Cost Relationships

    • At the maximum of TP (LB amount of labour, output QB) at point B, the VC function will "turn back" and as output decreases the VC will continue to rise.
    • This will be the same output level were the MC is a minimum.
    • as long as Q increases, AFC will decrease, it approaches the Q axis "asymptotically."
    • The average total cost (ATC) is the total cost per unit of output.
    • In Figure V.5, the AFC is shown declining over the range of output.

  • Oligopoly

    • Cournot's analysis of two sellers of spring water clearly established that the price and output of one seller was a reaction to the price and output of the other seller.
    • If they compete, Cournot concluded that the output would be
    • times the competitive output.As the number of competitors (N) increases, the result approaches the purely competitive result.
    • The number of models is evidence that it is a difficult task and there are problems with most approaches.
    • The output may be homogeneous or differentiated.

  • Measuring Productivity

    • Productivity is represented by production functions, and is the amount of output that can be generated from a set of inputs.
    • Productivity, in economic terms, measures inputs and outputs to derive overall production efficiency within a system.
    • Increased productivity means more output is produced from the same amount of inputs.
    • There are a variety of ways to approach the measuring of productivity in the context of production functions:
    • In this circumstance 'Q' is the quantity of output while each 'x' is a factor input.

  • Relationship Between Output and Revenue

    • Output can be consumed or used for further production.
    • Output is important on a business and national scale because it is output, not large sums of money, that makes a company or country wealthy.
    • Krispy Kreme's output is donuts.
    • It generates revenue by selling its output.
    • It is however, a profit maximizer, not an output or revenue maximizer.

  • Explaining Fluctuations in Output

    • In the short run, output fluctuates with shifts in either aggregate supply or aggregate demand; in the long run, only aggregate supply affects output.
    • In economics, output is the quantity of goods and services produced in a given time period.
    • National output is what makes a country rich, not large amounts of money.
    • Short-run nominal fluctuations result in a change in the output level .
    • The AD curve shifts to the right which increases output and price.