Gross Domestic Product - GDP

AAA

DEFINITION of 'Gross Domestic Product - GDP'

The monetary value of all the finished goods and services produced within a country's borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.

GDP = C + G + I + NX

where:

"C" is equal to all private consumption, or consumer spending, in a nation's economy"G" is the sum of government spending"I" is the sum of all the country's businesses spending on capital"NX" is the nation's total net exports, calculated as total exports minus total imports. (NX = Exports - Imports)

INVESTOPEDIA EXPLAINS 'Gross Domestic Product - GDP'

GDP is commonly used as an indicator of the economic health of a country, as well as to gauge a country's standard of living. Critics of using GDP as an economic measure say the statistic does not take into account the underground economy - transactions that, for whatever reason, are not reported to the government. Others say that GDP is not intended to gauge material well-being, but serves as a measure of a nation's productivity, which is unrelated.

To know more about GDP, please read Economic Indicators: Gross Domestic Product (GDP).

VIDEO

RELATED TERMS
  1. Sharing Economy

    An economic model in which individuals are able to borrow or ...
  2. Mixed Economic System

    An economic system that features characteristics of both capitalism ...
  3. Debt-To-GDP Ratio

    The ratio of a country's national debt to its gross domestic ...
  4. Economic Stimulus

    Attempts by governments or government agencies to financially ...
  5. Economic Conditions

    The state of the economy in a country or region. Economic conditions ...
  6. Economic Secession

    The exchange of goods or services outside of a traditional economic ...
Related Articles
  1. Economics

    How did World War II impact European GDP?

    Understand the effect of World War II on the European gross domestic product and what foreign and domestic factors influenced this change.
  2. Economics

    China's GDP Examined: A Service-Sector Surge

    China's economy has surged over the last several decades but still has a ways to go to modernize. Here's a look.
  3. Economics

    Economics 101

    Economics is the study of how individuals, governments, businesses and other organizations make choices that effect the allocation and distribution of scarce resources.
  4. Fundamental Analysis

    What economic indicators do oil and gas investors need to watch?

    Leading indicators for oil and gas investments are centered around the levels of production, consumer demand and inventory levels of petroleum products.
  5. Fundamental Analysis

    What economic indicators do agriculture investors need to watch?

    Agriculture investors should keep an eye on land prices, interest rates, inflation, harvest performance and speculative investment demand.
  6. Investing

    Where does stimulus economics come from?

    Depending on which type of economist you talk to, stimulus economics originated from the ideas of either a book published in 1776 or a book published in 1936. 1776 is the year Adam Smith published ...
  7. Economics

    Economic Growth

    Economic growth happens when the market value of the goods and services in an economy increase in one time period as compared to a prior time period.
  8. Investing Basics

    Economic Value Added - EVA

    Learn about this metric that measures a company's financial performance based on its residual wealth.
  9. Investing

    What is the difference between economic value added and market value added?

    Economic value added (EVA) is a performance measure developed by Stern Stewart & Co that attempts to measure the true economic profit produced by a company. It is frequently also referred ...
  10. Economics

    Keynesian Economics

    Learn more about this economic theory that incorporates government intervention in the marketplace.

You May Also Like

Hot Definitions
  1. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  2. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  3. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  4. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  5. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
  6. Bank Guarantee

    A guarantee from a lending institution ensuring that the liabilities of a debtor will be met. In other words, if the debtor ...
Trading Center