Money keeps going round the cycle, and it is assumed that all money earned by households is spent. Whether the economy's output, expenditure or incomes are measured; the actual value of the GDP is the same (assuming there have been no errors in calculating it). However, in the real world there are leakages (primarily Imports, savings and taxation) from the economy and injections (exports, government expenditure and investment) into the economy. However, if the government has a balanced budget (i.e. government expenditure = taxation), a balance of payments at equilibrium (i.e. exports = imports) and savings are equal to investment, GDP remains the same wherever one measures it in the economic cycle.
Output method- This method of measuring a country's GDP totals the output produced by its industry and services. Some industries, such as defence and education, little or nothing is traded in the market place, so no price can be set upon the intangible products. The value of the output of these industries is assumed to be equal to the value of the inputs to the industry. …
