All are specially concerned with counting the total amount of goods and services produced within the economy and by various sectors.
The impetus for that major statistical effort was the Great Depression and the rise of Keynesian economics, which prescribed a greater role for the government in managing an economy, and made it necessary for governments to obtain accurate information so that their interventions into the economy could proceed as well-informed as possible.
Therefore, we sum up the total amount of money people and organisations spend in buying things.
Key formulae are: GDP at market price = value of output in the economy - intermediate consumption NNP at factor cost = GDP at market price - net indirect taxes - depreciation + net factor income from abroad NDP at factor cost = compensation of employees + net interest + rental & royalty income + profit of incorporated and unincorporated NDP at factor cost The expenditure approach is basically an output accounting method.
where: C = Consumption (economics) (Household consumption expenditures / Personal consumption expenditures) I = Investment (macroeconomics) / Gross private domestic investment G = Government spending (Government consumption / Gross investment expenditures) X = Exports (Gross exports of goods and services) M = Imports (Gross imports of goods and services) Note: (X - M) is often written as XN or less commonly as NX, both stand for "net exports" The names of the measures consist of one of the words "Gross" or "Net", followed by one of the words "National" or "Domestic", followed by one of the words "Product", "Income", or "Expenditure".
However, in practice, minor differences are obtained from the three methods for several reasons, including changes in inventory levels and errors in the statistics.
Similar timing issues can also cause a slight discrepancy between the value of goods produced (Product) and the payments to the factors that produced the goods (Income), particularly if inputs are purchased on credit, and also because wages are collected often after a period of production.
Gross domestic product (GDP) is defined as "the value of all final goods and services produced in a country in 1 year".
[3] Gross national product (GNP) is defined as "the market value of all goods and services produced in one year by labour and property supplied by the residents of a country.
Countries with higher GDP may be more likely to also score high on other measures of welfare, such as life expectancy.