GDP
- GDP (Gross Domestic Product) is a widely used indicator of a country’s economic activity and growth.
- It measures the total value of goods and services produced within a country’s borders, including consumption, investment, government spending, and net exports.
3 Types of GDP:
- Nominal - Nominal GDP is the value of all goods and services produced in a country at current prices.
- Real - Real GDP is the value of all goods and services produced in a country, adjusted for inflation.
- Per Capita - Per capita GDP is the value of all goods and services produced in a country divided by the population.
Top 15 countries by GDP in 2024
| Country | GDP (in Trillions USD) |
|---|---|
| United States | $25.43 trillion |
| China | $14.72 trillion |
| Japan | $4.25 trillion |
| Germany | $3.85 trillion |
| India | $3.41 trillion |
Simple Version
GDP is like a report card for a country’s economy, showing how well it’s doing in terms of producing goods and services.
Example
A country’s GDP can be affected by various factors, such as changes in government policies, technological advancements, and global events.
Synonyms
- Similar: National Income, Economic Output, Gross National Product
Etymology
- The term “GDP” was first used in the 1930s by economist Simon Kuznets, who developed the concept of national income accounting.
Denotations
- GDP can be used to compare the economic performance of different countries, but it has its limitations, such as not accounting for income inequality and environmental degradation.
Frequently Asked Questions
How is GDP calculated?
GDP is calculated by adding up the value of all goods and services produced within a country’s borders, using the following formula: GDP = C + I + G + (X - M), where C is consumption, I is investment, G is government spending, X is exports, and M is imports.
What are the limitations of GDP?
GDP has several limitations, including not accounting for income inequality, environmental degradation, and unpaid work, such as household chores and volunteering.
How is GDP used in policy-making?
GDP is widely used by policymakers to evaluate the performance of an economy and make informed decisions about fiscal policy, monetary policy, and trade agreements.