gross domestic product

Examples of gross domestic product in the following topics:

• Defining GDP

  • Gross domestic product is the market value of all final goods and services produced within the national borders of a country for a given period of time.
  • Gross domestic product (GDP) is the market value of all final goods and services produced within the national borders of a country for a given period of time.
  • "X" (exports) represents gross exports.
  • "M" (imports) represents gross imports.
  • Depreciation (or Capital Consumption Allowance) is added to get from net domestic product to gross domestic product.

• Gross Domestic Product

  • Under economic theory, GDP per capita exactly equals the gross domestic income (GDI) per capita.
  • Estimating the gross value of domestic output in various economic activities;
  • For measuring gross output of domestic product, economic activities (i.e. industries) are classified into various sectors.
  • If GDP is calculated this way, it is sometimes called Gross Domestic Income (GDI).
  • Depreciation (or capital consumption allowance) is added to get from net domestic product to gross domestic product.

• Calculating Real GDP

  • The Gross domestic Product (GDP) is the market value of all final goods and services produced within a country in a given period of time.
  • GDP = private consumption + gross investment + government investment + government spending + (exports - imports).
  • For the gross domestic product, "gross" means that the GDP measures production regardless of the various uses to which the product can be put.
  • Production can be used for immediate consumption, for investment into fixed assets or inventories, or for replacing fixed assets that have depreciated.
  • "Domestic" means that the measurement of GDP contains only products from within its borders.

• Economic Growth as a Measuring Stick

  • Economic growth is measured as the increase in real gross domestic product (GDP) in the long-run, through higher resources or productivity.
  • Economic growth can be defined as the increase in real gross domestic product (GDP) in the long-run, or as increased productivity or via an increase in the natural resources (inputs) that create output.
  • Economic growth could also be described as an outward shift in the production-possibility frontier, allowing for the production of a higher quantity of goods (see ).
  • Measuring economic growth is reasonably straight-forward, primarily focusing on either increases in productivity or increases in the available production inputs in a given system.
  • This outward shift in the Production-Possibility frontier is indicative of economic growth within the economy it represents.

• Economic measures

  • The Gross Domestic Product or GDP of a country is a measure of the size of its economy.

• Calculating Economic Growth

  • It is usually measured as a percentage rate of increase in the real gross domestic product.
  • The cycle is made up of increases and decreases in production that occur over months and years.
  • Long-run economic growth is measured as the percentage rate increase in the real gross domestic product.
  • Expenditure approach: the value of the total product must be equal to the people's total expenditures.
  • Written out in full, the gross domestic product (GDP) equals private consumption (C) plus, gross investment (I), government spending (G), and the exports minus the imports (X - M).

• Other Approaches to Calculating GDP

  • Gross domestic product provides a measure of the productivity of an economy specific to the national borders of a country .
  • GDP calculated in this manner is sometimes referenced as "Gross Domestic Income" (GDI).
  • Depreciation (or Capital Consumption Allowance) is added to get from net domestic product to gross domestic product.
  • GDP = compensation of employees + gross operating surplus + gross mixed income + taxes less subsidies on production and imports.
  • So, adding taxes less subsidies on production and imports converts GDP at factor cost (as noted, a net domestic product) to GDP.

• Learning from GDP

  • There are two commonly used measures of national income and output in economics, these include gross domestic product (GDP) and gross national product (GNP).
  • Formula: GDP (gross domestic product) at market price = value of output in an economy in the particular year - intermediate consumption at factor cost = GDP at market price - depreciation + NFIA (net factor income from abroad) - net indirect taxes.
  • Formula: GDI (gross domestic income, which should equate to gross domestic product) = Compensation of employees + Net interest + Rental & royalty income + Business cash flow
  • The basic formula for domestic output takes all the different areas in which money is spent within the region, and then combines them to find the total output .
  • Formula: Y = C + I + G + (X - M) ; where: C = household consumption expenditures / personal consumption expenditures, I = gross private domestic investment, G = government consumption and gross investment expenditures, X = gross exports of goods and services, and M = gross imports of goods and services.

• Calculating GDP

  • Gross domestic product is one method of understanding a country's income and allows for comparison to other countries .
  • The income approach adds up the factor incomes to the factors of production in the society.
  • The output approach is also called "net product" or "value added" method.
  • Deducting intermediate consumption from gross value to obtain the net value of domestic output.
  • GDP at factor cost plus indirect taxes less subsidies on products is GDP at producer price.

• National Income

  • A variety of measures of national income and output are used in economics to estimate total economic activity in a country or region, including gross domestic product (GDP), gross national product (GNP), net national income (NNI), and adjusted national income (NNI* adjusted for natural resource depletion).
  • Arriving at a figure for the total production of goods and services in a large region like a country entails a large amount of data-collection and calculation.
  • The actual usefulness of a product (its use-value) is not measured – assuming the use-value to be any different from its market value.
  • Three strategies have been used to obtain the market values of all the goods and services produced: the product or output method, the expenditure method, and the income method.
  • GDP = C + I + G + ( X - M ); where C = household consumption expenditures / personal consumption expenditures, I = gross private domestic investment, G = government consumption and gross investment expenditures, X = gross exports of goods and services, and M = gross imports of goods and services.