Does this include subsidies? Also what is the difference between the product method and the income method?
Gross value added PLUS taxes on products MINUS subsidies EQUALS Gross domestic product at market prices. So gross value added is BEFORE you adjust for taxes and subsidies. I think the notes explain the methods quite well - are you using the ActEd course notes as well as the textbook? The product method adds up the value of products (so the values of cars, bananas, laptops etc). The income method adds up individuals' incomes (wages, interest rental income, profits belonging to shareholders etc). And they should both come to the same value
Okay thanks...yes i know its given in the notes. But there was a defn box in the 5th edition textbook saying it includes subsidies..so was just confirming
One more question Is the profits on the goods also included in the product method of calculating GDP? If yes then how is it included in the income method?
It is included in the income method. Look at the notes. They say that the income method adds up wages, interest, rent and PROFIT.
