we have and use three different ways of deriving the Gross Domestic Product namely Output, Income, and Expenditure (or final consumption) methods but why is it important to view the GDP from all three perspectives? what purpose does it serve? and how does it help macroeconomists, policymakers? how is it helpful?
It would be great if you could offer a detailed explanation. I am so thankful for your efforts. God bless!
These are three ways of calculating GDP - all of which in theory should sum to the same amount. Each of these approaches looks to best approximate the monetary value of all final goods and services produced in an economy over a set period of time (normally one year).
The major distinction between each approach is its starting point. The expenditure approach begins with the money spent on goods and services. Conversely, the income approach starts with the income earned (wages, rents, interest, profits) from the production of goods and services.
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