Economics · National Income Accounting
The Supply and Use Tables (SUT) framework enforces a 'Product Balancing' identity. Which statement MOST precisely describes its implication for the three approaches to GDP measurement?
- 1It allows MoSPI to use only the expenditure approach for advance estimates since SUT eliminates discrepancies in production-side data.
- 2It requires that total supply (domestic output plus imports) equals total use (intermediate consumption plus final consumption, investment, and exports), thereby reconciling production, income, and expenditure approaches and minimising statistical discrepancies.✓
- 3It ensures that nominal GDP from the income approach equals real GDP from the production approach after applying the GDP deflator.
- 4It mandates that the production approach always yields a higher GDP estimate than the expenditure approach due to inventory adjustment.
Correct answer
It requires that total supply (domestic output plus imports) equals total use (intermediate consumption plus final consumption, investment, and exports), thereby reconciling production, income, and expenditure approaches and minimising statistical discrepancies.
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