16th May 2015, 10:41 AM
Ways to measure GDP
Ways to measure GDP:
There are three different ways of measuring GDP;
- the income approach
- the output approach
- the expenditure approach
The income approach, as the name suggests measures people's incomes.
The output approach measures the value of the goods and services used to generate these incomes,
The expenditure approach measures the expenditure on goods and services.
In theory, each of these approaches should lead to the same result, so if the output of the economy increases, incomes and expenditures should increase by the same amount.
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