Calculating GDP: Relating the Expenditure, Income, and Value Added Approach

When economists measure the Gross Domestic Product (GDP) of a country, they are measuring the total amount of value a country produces in a specific time period.
The number one way GDP is calculated is using the “expenditure approach”. This approach looks at all the spending on domestically produced G&S (C + I + Gp + X - M) in an economy as a way to measure how much was produced in an economy. There are two reasons to use this approach to measure production: 1) it is the sale of a good or service that is reported to a government (not necessarily the production), and 2) we only know the value of a good when it is sold - because its value (price) is determined by the interaction of supply and demand (which occurs at markets). The value of a good or service is the total amount of money a customer pays for a good or service. The suggested “price” a business places on a good or service does not necessarily reflect its value, its value is what a buyer will pay for the good or service.
This video is made for 1st year college students or AP/IB Economics students. It focuses on foundational economic concepts.

[@nanakrisdoggie7375]

Amazing explanation 👍👍

[@jamiel5708]

Why do some formulas online add a depreciation amount and tax?

[@rook839]

in income approach since every source of income is calculated tax is income of government (tax revenue) and depreciation is added because capital depreciates or wears-off or breaks etc. within a given period, so depreciation is also added (since depreciation is a negative value already, it is just added) to determine the GDP of a country in a given period