What is GDP

GDP stands for Gross National Product. It is the market value of all final goods and services made within a country in a year. GDP is a measure of country's economic performance. It is used as a primary indicator to guage the health of a country's economy.

GDP can be calculated by the expenditure method.

GDP = C + I + G + (X - M)
where,
C = Consumption,
I = Investment,
G = Government spending
X = Exports
M = Imports

Types of GDP

Three main types of GDP are

  • Current GDP is GDP expressed in the current prices of the period being measured.
  • Nominal GDP is the production of goods and services valued at current prices.
  • Real GDP is the production of goods and services valued at a constant price level.