family.Moreover,
“gross” domestic product takes no account of
the wear and tear on the machinery, buildings, and so on (the
so-called capital stock) that are used in producing the output.
If this depletion of the capital stock, called depreciation,
is subtracted from GDP, we get net domestic product.Theoretically,
GDP can be viewed in three different ways.
• The production approach sums the “value added” at
each stage of production, where value added is defined as
total sales minus the value of intermediate inputs into the
production process. For example, flour would be an intermediate
input and bread the final product, or an architect’s
services would be an intermediate input and the building the
final product.
family.Moreover,“gross” domestic product takes no account ofthe wear and tear on the machinery, buildings, and so on (theso-called capital stock) that are used in producing the output.If this depletion of the capital stock, called depreciation,is subtracted from GDP, we get net domestic product.Theoretically,GDP can be viewed in three different ways.• The production approach sums the “value added” ateach stage of production, where value added is defined astotal sales minus the value of intermediate inputs into theproduction process. For example, flour would be an intermediateinput and bread the final product, or an architect’sservices would be an intermediate input and the building thefinal product.
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