Calculate GDP by the expenditure or income approach, plus real GDP and per capita.
GDP measures the total market value of final goods and services produced in an economy. The expenditure approach adds up all spending: GDP = C + I + G + (X − M). Imports are subtracted because they were already counted in C, I, or G. The income approach sums all incomes earned in production. Real GDP adjusts for inflation using the GDP deflator: Real GDP = (Nominal / Deflator) × 100.
Expenditure approach
GDP = Consumption + Investment + Government Spending + Net Exports
Real GDP
Real GDP = (Nominal GDP / GDP Deflator) × 100
Imports are not domestic production, but they have already been counted in consumption (C), investment (I), or government spending (G) when people buy foreign goods. Subtracting M corrects for that double-counting, ensuring only domestically produced output is included.
The GDP deflator is the ratio of nominal GDP to real GDP, expressed as an index with the base year = 100. A deflator of 120 means the price level is 20% higher than the base year. Unlike CPI, the deflator covers all goods produced domestically, not just a consumer basket.
No. Government transfer payments (Social Security, unemployment benefits, welfare) are not included in G because no goods or services are produced in return. Only government purchases of real goods and services count.
In the US (2023 approximate): C ≈ 70%, I ≈ 18%, G ≈ 17%, NX ≈ −5%. The negative net exports reflect that the US imports more than it exports.