Gross Domestic Product - GDP

What is Gross Domestic Product - GDP

GDP was first used by US economist Simon Kuznets during 1935-44. This word was introduced by Simon Kuznets to America. Gross domestic product is the scale or means of measuring the economic health of any country. GDP is usually calculated on an annual basis but in India is calculated every quarterly. The GDP figure is based on the growth rate of production in the major production areas of the economy.


The market value of all the finished (final) goods and services produced within the country’s domestic borders in a given period of time is called Gross Domestic Product - GDP.

In the ever increasing GDP economy there is a positive impact on poverty, health services, education, employment etc. Therefore it is very important to understand the GDP perception for the country’s financial welfare.

Features of GDP

(i) Under the GDP only the finished goods and services produced in the domestic borders of the country will be included.

(ii) GDP presents a measure of gross value of production.

(iii) Under the GDP only the value of the final goods and services is calculated.

(iv) Under the GDP only the market value of manufactured goods and services is included.

(v) GDP is calculated in financial year.

(vi) GDP  is measured on the basis of prevailing prices in the market.

How to calculate GDP

This equation can be used to calculate GDP. GDP = C + I + G + (X - M)

Gross domestic product = personal consumption + gross investment + government investment + government expenditure + (exports- imports)

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