How do you calculate GDP with the Income Approach?

By Sean Ross
The Income Approach to measuring gross domestic product (GDP) is based on the accounting reality that all expenditures in an economy should equal the total income generated by the production of all economic goods and services.

What is GDP and why is it so important to economists and investors?

The Gross Domestic Product (GDP) is one of the primary indicators used to gauge the health of a country's economy. It represents the total dollar value of all goods and services produced over a specific time period; you can think of it as the size of the economy. Usually, GDP is expressed as a comparison to the previous quarter or year. For example, if the year-to-year GDP is up 3%, this is thought to mean that the economy has grown by 3% over the last year. The United States has a GDP of $18,869.4 billion as of the fourth quarter of 2016, according to the Bureau of Economic Analysis.