Gross Domestic Product (GDP)

 

Gross Domestic Product (GDP)

The monetary value of all final goods and services produced within a country's borders over a period of time (usually one year) is called gross domestic product. The price of raw materials and intermediaries is not included in the measurement of GDP. The price of intermediate goods is not included in the measurement of gross domestic product to avoid double counting. Final goods and services mean goods and services used for final consumption. When measuring gross domestic product, the total market value of all goods and services is multiplied and the sum is calculated. It is measured only by the sum of goods and services produced within the country's borders and does not include resources received from outside the country such as remittances, pensions, etc.

Characteristics of the Gross Domestic Product

** This is the final monetary measure of goods and services.

** Only goods and services produced within the geographical boundaries of any country fall under its measure.

** It usually includes new goods and services produced in one year.

** It only measures goods and services with market value.

** This includes only the final goods and services to avoid duplication/double counting.

** This does not include any money received from outside the country.

** Capital benefits and transfer payments such as unemployment allowance, pensions, etc. are not included.

** It paints a clear picture of the economic situation of any country and with its help the size of the economy and growth rate can be estimated.

** It can be calculated in three ways: expenditure, production, or income.

** To understand the economy and the economy from a deeper perspective, it can be adjusted to inflation and population.

** Despite its limitations, GDP is a key economic variable to guide policymakers, investors, and businesses to make strategic decisions.
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