What Is GDP (Gross Domestic Product)? How Is It Calculated? (#27)

 

What Does GDP Stands For? What Is GDP? (Basic Definition!)

GDP stands for Gross Domestic Product.
GDP is the total of all the goods & services provided within a specific time period (1 year).

If we add all; goods, like— cars, bikes, clothes, etc. & services, like— doctors, teachers, nurses, etc.... produced within a year then we'll get a huge number & that number will be our GDP. Only the Domestic Products are added in the GDP's Calculation.

What Is GDP's Use? Why Is It So Important? Does It Impact Us In A Way? If So Why & How??

Well, GDP basically tells how strong an economy is. The greater the GDP is, the more have the country produced in goods & services in a year.... Hence, that Country's Economy is Stronger.

The GDP impacts us positively or negatively depending upon certain factors.... you know, if the GDP becomes negative or maybe if the GDP tends to decrease constantly then it may result in A Weak Economy, causing, recession &/OR Crisis's. & this'll affect us, quite negatively!

Investors from all over the world looks at the GDP of a country to know & to understand if making an investment, here will be profitable or not.

& if foreign investors are willing to invest in a country then it's a positive & if not then.... a negative one!

When the GDP is high then the domestic production factories, etc. can hire more people & pay good salaries & because of which more goods & services are produced within the country. This too affect people, but this is a positive sign & indicates a Strong Economy!

What's Added In A Country's GDP?

Remember that something PRODUCED WITHIN THE BORDER OF THE COUNTRY will only be added in that particular Country's GDP.

Like for example— If there's a smartphone which was produced in South Korea & has been imported here (in other countries.... like— India, USA, Canada, etc. etc.) then that'll be added in South Korea's GDP, only.

& only the Domestic Products are added in the GDP.

How Is GDP Calculated? (FORMULA!)

So this is how GDP is calculated.... Here's the formula:

GDP= [C + I + G + ( X - M )]
Here,
C = Consumer Expenditure
I = Industries Investment
G = Government Expenditure
X - M = Exports minus(-) Imports

So this was some basic information 'bout GDP.

I hope y'all might have understood 'bout what GDP basically is....

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Thanks For Reading!