Definition: Gross Domestic Product (GDP) is the total monetary value of all goods and services produced within a country’s borders in a specific time period, usually measured annually or quarterly. It is a comprehensive measure of a nation’s overall economic activity and a key indicator of economic health.
Components of GDP:
- Consumption: The total value of all goods and services consumed by households. It includes expenditures on durable goods, non-durable goods, and services.
- Investment: Spending on capital goods that will be used for future production, such as business investments in equipment and structures, residential construction, and changes in inventory levels.
- Government Spending: Total government expenditures on goods and services, including salaries of public servants, defense spending, and infrastructure investments.
- Net Exports: The value of a country’s exports minus its imports. A positive net export figure indicates a trade surplus, while a negative figure indicates a trade deficit.
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