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Gross Domestic Product

Overview GDP

GDP refers to Gross Domestic Product that consists of the total market value of all the products, goods and services that are produced within a country in a given period of time.

Significance GDP

– GDP helps to predict the size of the economy – It helps the banks and policymakers to see whether the economy is expanding or contracting – National Income helps policymakers to evaluate the impact of variables such as monetary and fiscal policy.

GDP Types

– Real GDP: It refers to the total value of all goods and services that are produced at constant prices. – Nominal GDP: It refers to the total money value of all goods and services produced at current market price. – Potential GDP: It refers to the ideal economic condition along with 100% employment in all the sectors and regular growth. Actual GDP: It refers to the current state of the economy.

How do we calculate GDP

GDP can be calculated through many methods. To calculate GDP following formulas can be used: GDP = Consumption (C) + Investment (I) + Government Spending (G) + Net Exports (NX)