Explain how the four uses of output help us determine GDP.

The four uses of output can also be defined as the four types of output.  Together, they make up a country’s gross domestic product (GDP).

Typically, most of a country’s output is used to satisfy the needs of consumers.  People need food, housing, clothing, and many other things.  All of this is part of output.  Output can also be used for investment.  In economic terms, investment occurs when businesses buy goods that will be used...

The four uses of output can also be defined as the four types of output.  Together, they make up a country’s gross domestic product (GDP).

Typically, most of a country’s output is used to satisfy the needs of consumers.  People need food, housing, clothing, and many other things.  All of this is part of output.  Output can also be used for investment.  In economic terms, investment occurs when businesses buy goods that will be used to make other goods. In other words, some parts of output are bought to create still more output.  A third thing that can happen is that output can be bought by the government.  The government buys goods such as police cars and computers.  It buys services like the labor of teachers.  All of this is part of output.  Finally, output can be sold overseas.  Likewise, foreign output can be bought in our own country.  Therefore, we can think of net exports as a part of our output. 

When we add all of these things together, we get our GDP.  GDP can be calculated by adding consumption, investment, government purchases, and net exports together.