GDP is calculated in three ways:
Spending Approach:
GDP=C+I+G+(X−M)
GDP=C+I+G+(X−M)- C (Consumer spending)
- I (Investment by businesses)
- G (Government spending)
- X - M (Exports minus Imports)
Income Approach: Adds up all wages, rent, interest, and profits earned in the country.
Production Approach: Adds up the value added at each stage of production.
All three methods give the same GDP!