What is GDP based on income approach?

Therefore, we see that the GDP or the aggregate income in the economy is the sum of total consumption ( C C ), total savings ( S S ), and net taxes ( T T ). This is yet another way to present GDP when applying the income approach. The GDP figure as per the income approach may be estimated in two ways.

What is an alternative method of calculating GDP?

In this video we explore an alternative method of calculating GDP: the income approach. The intuition behind the income approach is pretty straightforward because every time you spend money, that spending is someone else's income. Learn more about the income approach and its categories: wages, interest, rent, and profit. Created by Sal Khan.

What is the income approach?

The intuition behind the income approach is pretty straightforward because every time you spend money, that spending is someone else's income. Learn more about the income approach and its categories: wages, interest, rent, and profit. Created by Sal Khan. Want to join the conversation?

What adjustments should be made to the Gross Domestic Product (GDP)?

Adjustments then must be made for taxes, depreciation, and foreign-factor payments. The income approach to calculating gross domestic product (GDP) states that all economic expenditures should equal the total income generated by the production of all economic goods and services.