Gross Domestic Product (GDP)
The Gross Domestic Product (GDP) is a measure of the market value of all final goods and services produced in a country in a given period of time. It is also considered as a measure of the country’s overall economic performance.
The GDP can be calculated in three ways, namely, the production approach, the income approach, and the expenditure approach.
The production approach calculates the GDP by adding up the total value of all final goods and services produced within the country’s borders in a given period of time. This approach is also known as the output or value-added method.
The income approach calculates the GDP by adding up all incomes earned from production activity within the country’s borders in a given period of time. This includes wages, salaries, profits, interest, and rent.
The expenditure approach calculates the GDP by adding up all expenditures on final goods and services produced within the country’s borders in a given period of time. This includes consumption, investment, government spending, and net exports.
