All methods should give the same result. Tim Callen is an Assistant Director in the IMF’s External Relations Department. The quality of life may also depend on the distribution of GDP among the residents of a country, not just the overall level. Or it might involve the reduction of leisure time or the depletion of nonrenewable natural resources. allows us to determine whether the value of output has changed because more is What does GDP stand for? Please tell us where you read or heard it (including the quote, if possible). The National Bureau of Economic Research makes the call on the dates of U.S. business cycles. Theoretically, GDP can be viewed in three different ways: ● The production approach sums the “value-added” at each stage of production, where value-added is defined as total sales less the value of intermediate inputs into the production process. Delivered to your inbox! GDP = Consumption + Investment + Government Spending + Net Exports, https://www.britannica.com/topic/gross-domestic-product, gross domestic product (GDP) - Student Encyclopedia (Ages 11 and up). But because GDP is collected at current, or nominal, prices, one cannot compare two periods without making adjustments for inflation. The counting of the various goods and services for calculating GDP … )…, …accounts for about two-thirds of gross domestic product (GDP) in most developed countries, with the remaining one-third accounted for by business and government expenditures and net exports.

Real GDP is used to calculate GDP growth. In the example, the production of a German-owned factory in the United States will be counted as part of Germany's GNP (Gross National Product) in addition to being counted as part of United States' GDP. “Gross domestic product.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/gross%20domestic%20product. 'Nip it in the butt' or 'Nip it in the bud'. Printer friendly. Feedback, The World's most comprehensive professionally edited abbreviations and acronyms database, Ground Delay Program (aviation traffic flow initiative), Grundig DVD (Digital Versatile Disc) Player, Graduate Development Programme (various locations), General Development Policies (various organizations), Gestione Delle Presenze (Italian: Management of Attendance; software), Global Delivery Platform (various companies), Global Development Process (various companies), Giant Depolarizing Synaptic Potential (neurology), Ground-Delay Programme (air traffic management). ,random Articles from Britannica Encyclopedias for elementary and high school students. Economies are sometimes in periods of boom, and sometimes in periods of slow growth or even recession (with the latter often defined as two consecutive quarters during which output declines). GDP measures the monetary value of final goods and services—that is, those that are bought by the final user—produced in a country in a given period of time (say a quarter or a year). A measure of the value of the total production in a country, usually in a given year. ● The income approach sums the incomes generated by production—for example, the compensation employees receive and the operating surplus of companies (roughly sales less costs). Accessed 30 Oct. 2020. Find. GDP - the measure of an economy adopted by the United States in 1991; the total market values of goods and services produced by workers and capital within a nation's borders during a given period (usually 1 year) gross domestic product. That means, for example, that a baker who produces a loaf of bread for a customer would contribute to GDP, but would not contribute to GDP if he baked the same loaf for his family (although the ingredients he purchased would be counted). By signing up for this email, you are agreeing to news, offers, and information from Encyclopaedia Britannica. Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free! GDP per capita is calculated by dividing nominal GDP by the total population of a country. ● The expenditure approach adds up the value of purchases made by final users—for example, the consumption of food, televisions, and medical services by households; the investments in machinery by companies; and the purchases of goods and services by the government and foreigners. All content on this website, including dictionary, thesaurus, literature, geography, and other reference data is for informational purposes only. A statistical tool called the price deflator is used to adjust GDP from nominal to constant prices. Per capita GDP is a metric that breaks down a country's GDP per person and is calculated by dividing the GDP of a country by its population. Build a city of skyscrapers—one synonym at a time. GROSS DOMESTIC PRODUCT (GDP) Glossary Home About Contact Us Downloadable Version Advanced Filter Web Service OECD Statistics . One way gross domestic product (GDP) is calculated—known as the expenditure approach—is by adding the expenditures made by those three groups of users.

For example, unpaid work (such as that performed in the home or by volunteers) and black-market activities are not included because they are difficult to measure and value accurately. Our editors will review what you’ve submitted and determine whether to revise the article. GDP in a country is usually calculated by the national statistical agency, which compiles the information from a large number of sources. GNIGNI (Gross National Income) is a metric similar to GNP, since both are based on nationality rather than geography. Test Your Knowledge - and learn some interesting things along the way.

where consumption (C) represents private-consumption expenditures by households and nonprofit organizations, investment (I) refers to business expenditures by businesses and home purchases by households, government spending (G) denotes expenditures on goods and services by the government, and net exports (NX) represents a nation’s exports minus its imports. What made you want to look up gross domestic product? Economics is no different. Gross domestic product (GDP), total market value of the goods and services produced by a country’s economy during a specified period of time. GDP can be … Examples: NFL, More Definitions for gross domestic product, See the full definition for gross domestic product in the English Language Learners Dictionary, More from Merriam-Webster on gross domestic product, Britannica.com: Encyclopedia article about gross domestic product. Real GDP (or "Constant GDP") = value of output adjusted for inflation or deflation. This information should not be considered complete, up to date, and is not intended to be used in place of a visit, consultation, or advice of a legal, medical, or any other professional. The PPP exchange rate is the rate at which the currency of one country would have to be converted into that of another to purchase the same amount of goods and services in each country. In the United States, for example, there were six recessions of varying length and severity between 1950 and 2011. To doctors, accountants, and baseball players, the letters MRI (magnetic resonance imaging), GAAP (generally accepted accounting principles), and ERA (earned run average), respectively, need no explanation.

Nominal GDP (or "Current GDP") = face value of output, without any inflation adjustment. 'Frankenstein' and 'Frankenfood': Creator or Creation? The idea behind the expenditure approach is that the output that is produced in an economy has to be consumed by final users, which are either households, businesses, or the government. Updated: Get exclusive access to content from our 1768 First Edition with your subscription. "global warming" Corrections? English Language Learners Definition of gross domestic product : the total value of the goods and services produced by the people of a nation during a year not including the value of income earned in foreign countries See the full definition for gross … A substantial portion of government expenditure (e.g., spending on public health programs) is also considered to be consumption expenditure, as it provides a…. It Gross Domestic Product. See also: List of Countries by GDP per Capita. The international standard for measuring GDP is contained in the System of National Accounts, compiled in 1993 by the International Monetary Fund (IMF), the European Commission, the Organization for Economic Cooperation and Development (OECD), the United Nations (UN), and the World Bank. The usual method is to convert the value of GDP of each country into U.S. dollars and then compare them. It includes all final goods and services—that is, those that are produced by the economic agents located in that country regardless of their ownership and that are not resold in any form. Economists use many abbreviations. "Gross" (in "Gross Domestic Product") indicates that products are counted regardless of their subsequent use. Domestic (GDP) "Domestic" (in "Gross Domestic Product") indicates that the inclusion criterion is geographical: goods and services counted are those produced within the country's border, regardless of the nationality of the producer. It counts all of the output generated within the borders of a country. GDP is important because it gives information about the size of the economy and how an economy is performing. It includes all final goods and services—that is, those that are produced by the economic agents located in that country regardless of their ownership and that are not resold in any form. "Net" only shows products used for consumption or investment.

Omissions? Menu Search. Real GDP adjusts for inflation and so must be used to compare between years. These differences mean that emerging market and developing countries have a higher estimated dollar GDP when the PPP exchange rate is used.

The GDP growth rate indicates how quickly the economy is growing or shrinking. One of the most common is GDP, which stands for gross domestic product. Each country prepares and publishes its own GDP data regularly. In the United States, GDP is measured by the Bureau of Economic Analysis within the U.S. Commerce Department.

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