Bizblog term of the week: Gross Domestic Product(GDP)

Gross domestic product is the total value of goods and services produced in a country within a period. GDP is usually calculated on an annual basis, GDP is commonly used as an indicator of the economic health of a country, as well as a yardstick for a country's standard of living. 


Gross Domestic Product (GDP) can be estimated in the following ways;

• Expenditure basis:GDP is estimated under this basis by adding up total consumption, investment, government spending and net exports.

• Output basis : GDP is estimated under this basis by getting the monetary value of how many goods and services sold in the country. 

• Income basis : GDP is estimated under this basis by getting the sum of primary incomes distributed by resident producer units,how much income (profit) was earned

GDP gives the total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports.

GDP includes all goods and services produced in a country irrespective of the nationality of the firms or citizens producing such goods. GDP growth is one of the factors economists use to determine whether an economy is in a recession or not.

GDP is based on Value added