GDP 105: how GDP is calculated using the expenditure, production and income approaches
A one-hour recorded course from MCC Economics on gross domestic product (GDP). It explains what GDP measures, why it matters and how each of the three calculation approaches works, with worked examples.
GDP 105 is delivered by MCC Economics practitioners who apply economic analysis for governments, regulators and businesses.
Course lead
Warwick Anderson
Associate Director, MCC Economics
Warwick applied economics for many years as a senior executive in the Australian Government. At MCC he has supported the Australian Energy Regulator on its 2022 Rate of Return Instrument and co-authored Cost of Capital in Regulation: 10 Hot Topics.
Former senior executive, Australian Government
Cost of capital and regulatory allowances for utilities
GDP 105 is a one-hour on-demand course on how gross domestic product is calculated. It explains what GDP measures and why it matters, then works through the expenditure, production and income approaches with examples. You get the video lecture, slides, a transcript and a quiz as soon as you buy.
Key takeaways
GDP can be measured from what is spent, what is produced or what is earned, and in principle each route gives the same total.
The course takes each approach in turn and shows what goes into it.
Worked examples show how the figures are put together in practice.
It is recorded, with no live session, and access starts immediately after purchase.
What will you be able to do after the course?
You will be able to explain how a GDP figure is built and read the main components behind it. The course is built around three outcomes.
Explain GDP. What it measures and why it is the headline indicator of economic activity.
Use each approach. How the expenditure, production and income approaches arrive at GDP, and what each one tells you.
Apply it. Follow detailed examples that show the calculations in practice.
What does the course cover?
The lecture moves from what GDP is to how each calculation approach works, then applies them.
What GDP is and why it matters: the role of GDP as a measure of economic activity
The expenditure approach: household consumption, investment, government spending and net exports
The production approach: adding up the value each industry adds to the economy
The income approach: adding up the incomes earned from producing goods and services
Examples and practical applications: worked examples, followed by the quiz to test your understanding
What do the key terms mean?
These are terms you will meet in the course, in plain English.
Term
Meaning
Gross domestic product (GDP)
The total value of goods and services produced in an economy over a period, usually a quarter or a year.
Expenditure approach
Measures GDP as total spending on final goods and services: consumption, investment, government spending and exports minus imports.
Production approach
Measures GDP by adding up the value added by every industry, plus taxes less subsidies on products. Also called the output approach.
Income approach
Measures GDP by adding up the incomes generated by production, such as wages and company profits.
Gross value added
The value of what an industry produces minus the goods and services it uses up in producing it.
Net exports
The value of exports minus the value of imports.
Gross operating surplus
The income businesses earn from production after paying their staff, before interest, tax and depreciation.
Who is the course for?
It suits anyone who wants a firmer grasp of how GDP figures are produced and what sits behind them.
Students deepening their economics knowledge
Professionals who work with economic data
Decision makers who rely on economic indicators
Policy analysts
Researchers
Which courses should you take first?
GDP 105 is the second step in MCC's on-demand GDP series. Start with GDP 101 if the subject is new, then continue to alternative measures, the behaviour of GDP components and a real-world calculation.
MCC Economics is an independent consultancy, founded in London in 2017, that provides economic and financial analysis to governments, regulators and businesses. Its clients include Ofgem, Ofwat, the Department for Energy Security and Net Zero, the Abu Dhabi Department of Energy and the Civil Aviation Authority. Read more about its economic analysis work or meet the team on the people page.
I was delighted that MCC's work was completed on time, and within budget, helping us deliver important changes and improvements, to the benefit of our stakeholders.
Bea Natzler, Team Leader, Climate Change Committee, UK
Questions buyers ask before registering
Who teaches GDP 105?
See the instructor profiles near the top of this page for the current teaching team.
Is there a live session?
No. GDP 105 is available on demand only and no meeting is held. You watch the recorded lecture at your own pace.
What do I get when I buy?
A one-hour video lecture, the slides, an audio transcript and a quiz.
When can I start?
Straight away. Access to all course materials is given as soon as the order is placed.
Do I need to know about GDP already?
GDP 105 goes beyond a first introduction and looks closely at how GDP is calculated. If the subject is new to you, GDP 101 is the start of the series.
How much does it cost?
The MCC Economics courses page lists GDP 105 from £38.02. The final price is shown at checkout on Eventbrite.
Where do I buy the course?
Checkout is handled by Eventbrite, where MCC Economics and Finance is the organiser. The button on this page takes you straight to the listing.
Can my team take the course together?
Contact MCC Economics through the consultation page to discuss places for a team or training tailored to your organisation.
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