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,

and

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.