Four different measures of GDP
Using circular flow model we see that there are 4 equivalent ways of measuring GDP:
- Using the definition: market value of all finished goods (expenditure method)
- As the sum of all value added from all firms (value added method)
- As sum of consumption (government andprivate), investment and net exports (components method)
- As the sum of all returns from factor markets: return on capital, wages and so on (income method)