GDP & Its Value

Gross Domestic Product (GDP) is one of the most widely used measures of an economy's output or production. It is defined as the total value of goods and services produced within a country’s borders in a specific period- monthly, quarterly, or annually.GDP is an accurate indicator of the size of an economy and the GDP growth rate is probably the single best indicator of economic growth, while GDP per capita has a close correlation with the trend in living standards over time. GDP enables policymakers and central banks to judge whether the economy is contracting or expanding, whether it needs a boost or needs to be restrained, and if threats such as a recession or rampant inflation loom on the horizon.

The national income and product accounts (NIPA), which form the basis for measuring GDP, allow policymakers, economists, and businesses to analyze the impact of such variables as monetary and fiscal policy, economic shocks, such as a spike in the oil price, and tax and spending plans on specific subsets of an economy, as well as on the overall economy itself. Gross Domestic Product (GDP) is one of the most common indicators used to track the health of a nation's economy. The calculation of a country's GDP takes into consideration several different factors about that country's economy, including its consumption and investment. GDP measures the monetary value of final goods and services—that is, those that are bought by the final user—produced in a country in a given period (say a quarter or a year). It counts all of the output generated within the borders of a country. GDP is composed of goods and services produced for sale in the market and also includes some nonmarket production, such as defense or education services provided by the government.