Business

Learn About Expenditure Approach in Business: Expenditure Method Formula and How to Calculate GDP

Written by the MasterClass staff

Last updated: Sep 29, 2021 • 5 min read

The expenditure approach is a method for calculating a nation’s gross domestic product (GDP) by considering the private sector, investor, and government spending as well as net exports.

GDP is a measure of the total value of goods and services produced within a nation’s borders at the current market value. The expenditure method is distinct from the income method, which is also used to calculate GDP considering incomes derived from wages, rent, profits, and interest.