EconixaECONOMICS FUNDAMENTALS

GDP (Gross Domestic Product)

Plain definition

GDP is the total market value of all final goods and services produced within a country's borders during a given period, usually a quarter or a year.

In economics

The headline measure of economic size and growth, GDP can be computed by expenditure (C + I + G + NX), income, or value-added approaches. It excludes used goods, financial transactions, and unpaid household work, and says nothing about distribution.

Example

If a country produces 2trillionoffinalgoodsandservicesthisyear,itsnominalGDPis2 trillion of final goods and services this year, its nominal GDP is 2 trillion.

Common confusion

GDP measures production within a country's borders, not the income of its citizens; GNP/GNI counts citizens' income wherever earned, so they differ when foreign workers or firms are significant.