GDP accounting ignores the depletion of natural resources. Buying and selling existing financial transactions because there is only an exchange of ownership rights without any productive activity involvement except for broker s services. The two basic approaches to calculate GDP are the expenditure approach and the income approach. The expenditure is the sum of the aggregate expenditure on all-final goods and services produced in a given year. The income approach is the sum of aggregate income earned by the owners of resources used to produce output in a given year.
Government expenditures are the government purchases of goods and services.
Government goods are valued at cost. Gross investment includes depreciation. Depreciation is a reduction in the value of capital goods over time due to their use in production and capital consumption allowance is the estimated value of depreciation plus the value of accidental damage to capital stock. However, the value of accidental damage is relatively small, so it is common to use the term capital consumption allowance as depreciation. Net interest income includes the net interest income paid by business to households and net interest paid to U.S. by foreigners.