The product method which is used to calculate the aggregate annual value of goods and services produced is also called ______.

The correct answer is Value added method. 

Key Points

• Value Added Method:
• This approach to calculating the aggregate annual value of goods and services produced in an economy, often referred to in calculating GDP, is also known as the value added method or the production method.
• This method includes the total of all gross value added by all resident producer units in the economy.

Additional Information

• Income Method:
  • This is another method of measuring GDP, which is based on the total income earned by all households, firms, and the government.
  • It includes wages and salaries, rents, interest, profits, and miscellaneous income earned by the residents of the country during the year.
  • It doesn't consider transfer payments such as pensions, unemployment benefits, or welfare payments because these are not earned in return for goods or services produced.
• Depreciation Method:
  • This method isn't directly used to calculate GDP or aggregate value of goods and services.
  • Depreciation refers to the decrease in the value of physical capital—from equipment to buildings—as it is used over time and wear and tear takes place.
  • However, depreciation is accounted into Net Domestic Product (NDP), which is GDP minus depreciation on a country's capital goods.
• Expenditure Method:
  • This is one of the three chief methods of calculating GDP.
  • It measures the total spending on all final goods and services (consumption expenditure, investment, government spending, and net exports) produced within a country within a specified period of time.
  • It includes consumer spending on goods and services, government spending, capital investments made by businesses, and net exports (exports minus imports).