"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."
14 Minute Instruction
ONE THING TO ADJUST
IN THIS VIDEO!!!
- Income Approach takes
the NI (WIRP) and adds
foreign factor income,
indirect business taxes,
- This video is awesome,
but you need to keep
track of the adjustment
In depth explanation of C + I + G + NX
4 Minute Instruction
Calculating GDP: Nominal GDP & year to year changes