Gross domestic product
Gross Domestic Product (GDP)
Gross Domestic Product (GDP) /ɡrəʊs dəˈmɛstɪk ˈprɒdʌkt/ is a measure of economic activity within a country. It is the total value of all goods and services produced over a specific time period within a country's borders.
Etymology
The term "Gross Domestic Product" is derived from the phrase "domestic gross product", which was first coined in the United States in the early 20th century. The term was later standardized by the International Monetary Fund (IMF) and the World Bank.
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.
Related Terms
- Gross National Product (GNP): This is the total value of goods and services produced by a country's residents, regardless of the location of the production. It includes GDP plus income earned by its residents from overseas investments, minus income earned within its borders by overseas residents.
- Net Domestic Product (NDP): This is an annual measure of the economic output of a nation that is adjusted to account for depreciation, calculated by subtracting depreciation from the GDP.
- Real GDP: This is a macroeconomic measure of the value of economic output adjusted for price changes (i.e., inflation or deflation). This adjustment transforms the money-value measure, nominal GDP, into an index for quantity of total output.
- Nominal GDP: This is GDP evaluated at current market prices. Therefore, nominal GDP will include all of the changes in market prices that have occurred during the current year due to inflation or deflation.
- Purchasing Power Parity (PPP): This is a popular metric used by macroeconomic analysts that compares different countries' currencies through a "basket of goods" approach.
External links
- Medical encyclopedia article on Gross domestic product
- Wikipedia's article - Gross domestic product
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