Are social security payments included in the gross domestic product or GDP?

Answer 1

GDP can be calculated through the expenditures, income, or output approach.

The expenditures approach says GDP= consumption + investment + government expenditure + exports - imports.

There are a few methods used for calculating GDP, the most commonly presented are the expenditure and the income approach.

The most well known approach to calculating GDP, the expenditures approach is characterized by the following formula: GDP = C + I + G + (X-M) where C is the level of consumption of goods and services, I is gross investment, G is government purchases, X is exports, and M is imports.

GDP at producer price theoretically should be equal to GDP calculated based on the expenditure approach.

expenditure approach (noun) The total spending on all final goods and services (Consumption goods and services (C) + Gross Investments (I) + Government Purchases (G) + (Exports (X) - Imports (M))GDP = C + I + G + (X-M).

income approach (noun) GDP based on the income approach is calculated by adding up the factor incomes to the factors of production in the society.

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.

So in theory any benefits paid out by a Government office are taken into consideration based on the "consumer" figures. Therein, someone would use their benefits to purchase goods.

However, benefits are Not directly used in the equation.