Methods of measuring Gross Domestic Product (GDP)

Expenditure approach The expenditure approach to measuring gross domestic product involves adding-up all the spending on final goods and services which have taken place within the year under review. The total expenditure can be established by adding together consumption, investments, government purchases and net exports in the country within a particular year.

Income approach The income approach to measuring gross domestic product involves adding-up the income earned by everyone in the country. The total income can be obtained by adding up wages earned by workers, interests earned on capital investment, rents earned on land and property as well as profits earned by firms.

Value-added approach The value-added approach to measuring gross domestic product emphasises on value additions to the various stages of the production process of goods. The value-added approach is appropriately used when considering the services involved in the resale of existing goods.