Unlike the expenditure method, the income approach to measuring GDP is based on the total income a country earns. It stipulates that national expenditure equals the total income from goods and services produced by an economy over a period (most commonly one year). The Income Approach Formula Every time...

The Expenditure method is a major approach used when calculating the Gross Domestic Product of a country. Before we examine it in detail, let’s explore how a typical economy works. What is the Circular Flow in a Four-Sector Economy? In every economy, we have four main sectors: households, firms,...