Gross Domestic Product ( Gdp ) Essay

918 Words Feb 22nd, 2016 4 Pages
What is Gross Domestic Product (GDP)? It is defined as, ‘The value of a country’s overall output of goods and services at market prices, excluding net income from abroad.’ There are three ways it can be estimated, expenditure basis-the amount of money spent, output basis-the amount of goods and services sold, and income basis-the amount of money earned. The estimates are published on a quarterly basis. (GDP 2016)
The most common way the gross domestic product is expressed, as a comparison to the previous year or quarter. An example of this is if the year-to-year gross domestic product is up 5%, it is thought to mean the economy has also grown by 5%. It is complicated when it comes to measuring gross domestic product. There are two ways to measure, and they both should arrive closely to the same total, it is by what everyone spent in one year, or by what everyone earned in one year. (Investopedia 2016)
The most common approach is tallied by adding, net exports, government spending, investment, and total consumption, which differs from the income approach, also referred to by gross domestic products(I), and it tallies, the compensation to employees, gross profits from non-incorporated and incorporated firms, and taxes less any subsidies. (Investopedia 2016) What does gross domestic product represents is the economic production and the growth, the impact on everyone within the economy is huge. One way to look at it is when a economy is growing and healthy, you…

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