Although we commonly use the expenditures approach to measure gross domestic product, we can also measure GDP by using the approach.

The expenditures approach is indeed one of the most commonly used methods to measure Gross Domestic Product (GDP). However, another key approach to measure GDP is the income approach.

Explanation of the Income Approach

1. Overview: The income approach calculates GDP by adding all incomes earned by individuals and businesses in a nation over a specific period. This includes wages, profits, rents, and taxes, minus subsidies.

2. Components: The main components of the income approach include:

   • Wages and Salaries: Compensation to employees.
   • Corporate Profits: Earnings from corporate activities.
   • Rental Income: Income earned by property owners.
   • Interest Income: Earnings from investments and savings.
   • Taxes on Production and Imports: Taxes collected by the government that do not include transfers or subsidies.

3. Formula: The income approach can be expressed using the formula: $\text{GDP} = \text{Wages} + \text{Rent} + \text{Interest} + \text{Profits} + \text{Taxes} - \text{Subsidies}$

4. Usage: The income approach provides a measure of economic activity can often be considered alongside the expenditures approach for a comprehensive view of economic performance.

In conclusion, while the expenditures approach aggregates total spending on goods and services, the income approach focuses on summing incomes earned, thus offering a different perspective on the economy's performance. Both approaches, when aligned, should theoretically yield the same GDP figure.