According to Boyes & Melvin, this type of GDP is the most accurate indicator of a country’s economy. It measures the value of output in two or more different years by valuing the goods and services adjusted for inflation. For instance, in a range of five years, the nominal GDP might be different but the real GDP remains the same. However, though the above-mentioned types of GDP give different values, they are calculated using the same approaches, which include:
a)Income Approach, whereby all the incomes of people within the borders of a country are summed up to determine the economy of that particular country with an assumption that the earning are as a payment of the factors of production used in producing the finished goods and services.