Measuring GDP using the Income Approach and the Expenditure Approach - HD

GDP is generally understood to represent the health of a nation's economy, and most people realize that if GDP is growing, things are going well, while if it's falling things have turned sour in the economy. But what, precisely, does GDP measures? There are two primary methods for measuring GDP, which should yield the same result even though they measure completely different factors.
-The income approach: measures the total incomes earned by households in a nation in a year.
-The expenditure approach: measures the total amount spent on the goods produced by a country in a year.
By examining the circular flow model of a nation's economy, we can demonstrate why every dollar earned by a household in a nation's resource market will ultimately be spent in the product market, or leaked through taxes, savings, and import spending, leading to injections in the form of government spending, investment and export sales.
In the video lecture below, the two methods for measuring GDP are introduced, and the various components it includes are explained in detail.
Want to learn more about economics, or just be ready for an upcoming quiz, test or end of year exam? Jason Welker is available for tutoring, IB internal assessment and extended essay support, and other services to support economics students and teachers. Learn more here! econclassroom.c...

[@manojkumarpandey2992]

Usually I don't make comments......but here I can't stop myself but to appreciate this one.

[@drgunit893]

The only video that made me properly understand how GDP is measured with the Income approach!

[@floopy312]

The best video about GDP measurement.

[@MrKelvinag]

Agreed, I feel confident going into exam today lol

[@engagekem2586]

word

[@lilyasser7785]

ربنا يخليك لينا يا اسطا، دانا منغيرك زماني سقط
you explain better than my teachers at school, thank youuuuuu

[@veld66]

One of the best Economics videos available on RUclips, very confident approaching my exams!

[@darktheme2192]

thank you for a simple to understand lesson.
you helped shorten the hours spent studying.

[@charlotteaates4376]

Preparing to teach basic economic concepts - national income, circular flow etc and found this really helpful in terms of a way to explain this clearly - many thanks

[@truerealpearl7781]

So thankful for these videos!!! I kept reading my book and just couldn't get it, so thank you!

[@lukasbaral5108]

This one video is pretty much everything you need to know, brilliantly explained.

[@theasmrgamerunexposed2251]

These videos are genuinely excellent I'm sure people learn more thanks to videos like these than they do in lectures

[@mrs.m.w]

Wow, this was such a better explanation than my instructor. This answered every one of my lingering questions and even explained things I didn't know I didn't understand well. So very happy to have found this before my exam. Thank you!

[@muhammedusman8442]

hy, Madam have you any idea how is lm model application?

[@muhammedusman8442]

if u hv then help me i m failed to understand how this model work?

[@elengrigoryan5446]

A brilliant explanation! Thank you!

[@MN-ne7ee]

best explanation of gdp calculation. comprehensive yet simple

[@chrisralte]

This is probably the best explanation on GDP. Concise, simple & informative :)

[@MystiqWisdom]

This little picture can be said to sum up the whole world. Of course, you can magnify each part a million times to see how everything works in detail, but this is a beautiful little diagram that everyone should understand.

[@herifinamcasi]

thanks man, was really helpful for my midterm

[@Joshuaquilina]

Macroeconomics tomorrow and you just saved my life!! Thumbs upp professor :))

[@shockwave2477]

How was the exam?

[@danaaron1]

@@shockwave2477 lol i dont think hes gon reply after 7 years

[@vkrgfan]

No, you can’t prepare for exam from one RUclips video.

[@bhaskartarafdar1560]

I am from science background. But the way of explanation help me a lot to understand about GD.. thanks a lot Sir

[@atulnagargoje6337]

One of the best teacher on economics

[@sooweichan3501]

Wow! This is literally the best video for measuring GDP and circular flow! Love the content!! Thank you!

[@Moon1stJan]

Thank you for clearing my doubt and making this easy to understand.

[@tierneyeducation]

Ah the classic income and expenditure approach. Makes me miss teaching!

[@richbrainedutv]

Thank you very much. I have spent days trying to understand this but did not until today. Really appreciate you.

[@JohnHaIo]

This taught me more than my prof does in 2 weeks of lecture. College is pointless and expensive.

[@bottomupengineering]

Great lecture series Jason.

[@delfinapacho1823]

Awesome, clear and understandable

[@ukemeedem255]

Thanks, this is completely what I was looking for

[@Jramirez07062001]

Your explanation is good enough to teach at any age. Thank you.

[@asnakew21tarekegn27]

It nice Presentation about GDP. thank you

[@WTFicey]

Very clear, precise and coherent. Thank you.

[@sreeniala4603]

Why are taxes collected by the government not accounted in the income approach method ?

[@damithSL]

Totally helped to get through my econ assignments.
You're a life savior.....my economic Jesus Christ!

[@tl9150]

Thanks for the great walkthrough!

[@biplabsing56]

Thank you sir I am very helpful for this vedio

[@user-ky4ny2ri3u]

finally understood GDP
WELL DONE AND THANKS

[@hahasong995]

thank you for explanation! but I still can not understand why it is said that household earned in the resource market ultimately is spent in the product market？ I think they may save some money, and invest to the firms instead of buying goods in the product market.

[@theperfectcelibate8669]

Most usefull and effective video to understand the GDP of a country.

[@michaelsadek4449]

i understood this more than my macroeconomic teacher greeting from me to you i appreciate your efforts

[@williamp9117]

Can this method be done at a city/district level

[@sandraximenez1254]

Awesome! thank you so much... every well explained!

[@begoodtoall3164]

Thank you and God bless you and your family real good in Jesus mighty name for this good work. Amen.

[@sandiledayi4076]

Brilliant, very simplified and easy to understand

[@AlomgirkabirPolash]

Thanks 😊 it's very helpful.

[@hashi95]

Excellent video

[@harismir4461]

Love your work n teaching skills,
U made it very Simple and Easy.!

[@boballs13]

I believe the best way to measure a nations economy is to factor it's GDP, it's export/imports and it's external debt. If I can come up with an equation representing this factors I am certain a better comprehension of an economy can be illustrated. But the GDP portion my need to be tweaked. In any case please tell me what you think.

[@freeway7979]

I think we need a clarification @9:00. Some government spending should be excluded in GDP calculation such as social security payments and welfare payments. These spendings are called "Non-production transactions."

[@priyankakushwaha3199]

why we add depreciation in GDP when we calculate by income approach?

[@fernandemessanga4938]

Thanks for this video. I have a question :I don't understand the example on the t-shirt buy in China . if i buy a product in a foreigner market how the money spent will return in US by export ? assuming that in the video we say an import is leakage in the cycle.

[@vkrgfan]

In which category public corporate and sales taxes should be included?
Since transfer payments (welfare) isn’t part of GDP but financed through taxation, shouldn’t taxation be recorded as Government income?

[@weberkom8630]

awesome !! I got it finally (thumb up)

[@engagekem2586]

thank u...that's the best video to understand Gdp mesurmt

[@Shah66666]

awesome. keep it up sir!

[@manpiero104]

Wow...you made the understanding very easy and simple❤👏👏

[@fmomani]

profound and clear explanation of GDP. thank you!

[@dechabomb1]

In summary in this video clip, income= expense. Is it correct? I am not sure. As I know, income - expense = profit or Loss. So the way to measure GDP by income appoarch and expenditure approach is not equal. That 's why 2 countries have the same number of GDP but one has national debt. Another has not.
And one more thing, government get money from
1. Tax ( normal way)
2. Borrow ( called bonds)
3. Just print money (called QE)

[@AbdulQadir-gf5nv]

Countless thanks for magical explanation 👍🏼

[@thongsawathkeovichit5495]

Thanks for a great lesson

[@wesley21878]

Thank you! This helped me out a ton!

[@nguyenxuanlinh6741]

It is an amazing video for understanding the method of calculating GDP. It would be great if you could explain how a government calculate in reality? Where they collect the data? How to estimate the deviation of calculation?

[@awesusamuel9472]

Great job

[@sipeolusoga5817]

How are direct taxes treated in GDP by income method

[@desigamer1618]

Beautiful explanation.. I also want to know the product approach. Thanks a lot

[@mohameddiaby835]

My problem with the GDP, is that it is easily confused with total wealth. It is time economists try to make the difference between the two.

[@superpantman]

Total wealth isn't really a term used in Economics. A nation's economy is always moving and flowing. If you want to see an overall comparison of wealth between two countries then GDP is the best figure to look at.

[@stantaylor2649]

How do one calculate GDP in a Cummunistic economy?

[@juandavidmunoz2781]

Excellent video.. Thank you so much

[@nadimanwari7499]

Thank you sir

[@naya2276]

thanks so much sir

[@parthshah3485]

Concepts clear. Thank you so much.

[@siongsiongtan8330]

Thank you. Crystal clear

[@rozyhaokip6391]

Hi Jason please make videos on econometrics.. yo u really did a great job... cheers

[@berryonah]

thank you for this! I really learned a lot!

[@Randkn]

thank you so much , great explanation!!

[@coleencadungog6754]

nice video

[@atinsingharoy9282]

its very good learn

[@latifsalman123]

Thank you sir, it was extremely useful.

[@Juan-wb3bz]

Is expenditure and income approach should the same output or must be veryical?

[@kwakhiwentshabakidx8307]

Thanks for that lecture!

[@superpantman]

Excellent upload

[@lmao13366]

So simple. Thank you so much. What software did you use to give this explanation???

[@MYSTFD2]

Very helpful! Thank you so much.

[@ibrahimelhaddad7272]

Very helpful ,thank you .

[@marvinvillapando6361]

tnx for the video..
sir do you know where to get those data for me to compute the gdp or estimate the future gdp of a certain country like the US or Eu? any online resources?

[@kawshikrahman6325]

thanks a lot

[@abensrivastava6359]

thanks

[@Bryan-xe3pj]

Thank you, well presented.

[@EightToneSpanish]

Could some one help me get this straight in my head. At the end of the video he states all money spent on imports will always come back as reciprocal money spent on exports.
Is this really true.
I thought if imports are bought the foreign country receives foreign exchange which would be changed into their domestic currency but not come back to as goods.
I've always thought of imports as a "permanent" leak of domestic expenditure.

[@CharlieTariliu]

Thank you. It was refreshing.

[@ashutoshtripathi3676]

very well explained

[@anonymousfounder3652]

what about households save their money at their home?

[@robertweinmann3520]

Awesome video. Really helped me. Thank you :)

[@MrSpoon-th3fq]

Hello, great vid. I would love, if you have time, a copy of your flow diagram, i cannot find anything like it.

[@alvinalvins1626]

great video...helped me alot

[@janie8510]

thanks so much for this video

[@shahfaisal9674]

Sir i am your new subscriber...👍

[@KhalilHomaam]

Thank you, it was really useful.

[@uncommonfavourmercy.k6830]

Thank you

[@lilylala3562]

Thanks man

[@PABTVGH]

Thanks Alot....

[@celinegastelum6480]

very helpful, thank you!