GDP – Gross Domestic Product
GDP or Gross Domestic Product is the measure of aggregate output in the national income accounts. It is the market value of goods and services produced by labor and property located in a particular country. There are two sides from which we can observe the gross domestic product: from the production side and from the income side. From the production perspective, GDP can be defined:
1. As the value of the final goods and services produced in an economy during a given period.
2. As the sum of value added in an economy during a given period.
From the income perspective, GDP can be defined:
1. As the sum of all incomes in an economy during a given period.
Decomposed in a way used by macro-economists, it looks like this:
Y = C + I + G + NX + IS
C —— consumption or personal consumption expenditures
I ——- investment (also called gross private domestic fixed investment)
G —– government purchases
NX —- net exports
IS —- change in the volume of inventories held by business
Also, there is a distinction between “nominal” GDP and “real” GDP.