The most important measure of economic activity in a nation, the Gross Domestic Product (GDP), is the crossing point of three sides of the economy: expenditure, output, and income.

As a measure of well-being of a nation for international and temporal comparisons, the GDP provides a good first approximation. GDP, however, ignores other crucial elements of general well-being, such as environmental conservation, safety issues, life expectancies, and overall population skill sets and literacy.

 

To measure economic activity, one needs a meaningful aggregation of all kinds of productions. The territory's productions are the crossing result of 1) effective demand, 2) production capabilities, and 3) income. Income arises from payments distributed to production factors and it provides the necessary finance for demand. 
  
Source:  
economicswebinstitute.org