Gross Domestic Product

Gross Domestic Product (GDP)

Gross Domestic Product (GDP) is a measure of economic activity within a country. It's the total value of all goods and services produced over a specific time period within a country's borders.

Pronunciation: /ɡrəʊs dəˈmɛstɪk ˈprɒdʌkt/

Etymology: The term Gross Domestic Product is derived from the English language. "Gross" refers to total, "Domestic" refers to home or within a country, and "Product" refers to something that is produced.

Definition

GDP is the monetary value of all finished goods and services made within a country during a specific period. It provides an economic snapshot of a country, used to estimate the size of an economy and growth rate. GDP can be calculated in three ways, using expenditures, production, or incomes. It can be adjusted for inflation and population to provide deeper insights.

Components of GDP

GDP is composed of four main components:

1. Consumption - This is the total spending by households in a country.

2. Investment - This refers to capital expenditures by businesses and households.

3. Government Spending - This is the total expenditure by the government on goods and services.

4. Net Exports - This is the difference between a country's exports and imports.

Importance of GDP

GDP is an important indicator of a country's economic performance. It's used by economists to compare the economic performance of different countries, and to make international comparisons. GDP is also used to guide the policy decisions of governments and central banks.

Related Terms

• Economy - The system of production, distribution, and consumption in a country.

• Inflation - The rate at which the general level of prices for goods and services is rising.

• Economic Growth - An increase in the production of goods and services in an economy.

• Per Capita GDP - A measure of the average income per person in a country.

See Also

• Gross National Product
• Nominal GDP
• Real GDP
• GDP Deflator

External links

• Medical encyclopedia article on Gross Domestic Product
• Wikipedia's article - Gross Domestic Product

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