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.

• 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.

• 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).

• The Business Cycle: Definition and Phases

  • The term business cycle refers to economy-wide fluctuations in production, trade, and general economic activity.
  • The term "business cycle" (or economic cycle or boom-bust cycle) refers to economy-wide fluctuations in production, trade, and general economic activity.
  • From a conceptual perspective, the business cycle is the upward and downward movements of levels of GDP (gross domestic product) and refers to the period of expansions and contractions in the level of economic activities (business fluctuations) around a long-term growth trend .
  • Business cycle fluctuations occur around a long-term growth trend and are usually measured by considering the growth rate of real gross domestic product.
  • The NBER identifies a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production. " This is significantly different from the commonly cited definition of a recession being signaled by two consecutive quarters of decline in real GDP.

• 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.

• Imports: The Economics Impacts of Buying Goods from Other Countries

  • The domestic purchaser of the good or service is called an importer.
  • On a national level, in most countries international trade and importing goods represents a significant share of the gross domestic product (GDP).
  • However, the factors of production are usually more mobile domestically than internationally (capital and labor).
  • It is common for countries to import goods rather than a factor of production.
  • Imports account for a significant share in the gross domestic product (GDP) of a country.

• 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.