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There are two principal ways of calculating GDP: Expenditures Approach: GDP = C + I + G + (X-M) and Income Approach: NI = W + R + i + PR. The first focuses on total expenditures on goods and services produced in the period, while the second concentrates on the payments to the factors of production involved in those production activities within the period. In principle, the two approaches should result in the same GDP value since expenditure by one party is always an income for some other party. However, some discrepancies arise due to measurement errors.
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