Measuring GDP
Gross domestic product, GDP, is defined as the total value of all goods and services produced within that territory during a given year. GDP is designed to measure the market value of production that flows through the economy.
- Includes only goods and services purchased by their final users, so GDP measures final production.
- Counts only the goods and services produced within the country's borders during the year, whether by citizens or foreigners.
- Excludes financial transactions and transfer payments since they do not represent current production.
- Measures both output and income, which are equal.
Read more about Measuring GDP: Distinguish Between GDP and Gross National Product GNP, Real GDP and Nominal GDP, Three Approaches To Measuring GDP, Distinguish Between The GDP Deflator and The Consumer Price Index, The Major Limitations of GDP, Alternative Measures of Domestic Output and Income
Famous quotes containing the word measuring:
“As an example of just how useless these philosophers are for any practice in life there is Socrates himself, the one and only wise man, according to the Delphic Oracle. Whenever he tried to do anything in public he had to break off amid general laughter. While he was philosophizing about clouds and ideas, measuring a flea’s foot and marveling at a midge’s humming, he learned nothing about the affairs of ordinary life.”
—Desiderius Erasmus (c. 1466–1536)