Gross Domestic Product (GDP)
A system used by the government to allocate resources and funds among different
parts of the economy, to ensure equal wealth distribution.
The total value of all goods and services produced within a country's borders in a
specific period, used to measure economic growth.
A statistical formula used to assess the key factors driving economic growth within
a nation, such as technological advancements and workforce productivity.
Gross Domestic Product (GDP) is a key indicator of a country's economic performance. It represents the total market value of all final goods and services produced within a country's borders in a specific time period, typically a year. This includes everything from the manufacturing of goods to the provision of services like healthcare and education.
GDP is used as a measure of economic growth because it reflects the overall level of economic activity within a country. A higher GDP indicates that the economy is producing and consuming more goods and services, which is generally associated with a higher standard of living.
GDP is calculated using either the expenditure approach or the income approach. The expenditure approach adds up the total spending on goods and services in the economy, including consumption by households, investment by businesses, government spending, and net exports (exports minus imports). The income approach adds up all the income generated from the production of goods and services, including wages, profits, and taxes.
GDP growth rate is often used to compare economic performance between different countries or over different time periods. It is calculated by taking the percentage change in GDP from one year to another. A positive GDP growth rate indicates economic expansion, while a negative growth rate indicates a contraction or recession.
However, it is important to note that GDP does not capture the overall well-being or happiness of a population. It only measures economic output and does not account for factors such as income inequality, environmental sustainability, or the distribution of wealth. As a result, many economists and policymakers use additional indicators alongside GDP to gain a more comprehensive understanding of a country's economic and social development.