The GDP Calculator computes gross domestic product using the expenditure approach (C + I + G + X − M) or the income approach.
GDP = 22,800
| GDP (C + I + G + X − M) | 22,800 |
| Net exports | -700 |
| GDP (income approach) | 21,800 |
| National income (before taxes and depreciation) | 16,600 |
Gross domestic product is the total market value of all final goods and services produced within a country in a period, usually a year or quarter. It is the most widely used measure of the size and health of an economy.
GDP = C + I + G + (X − M): household consumption, business investment (including housing and inventories), government spending on goods and services, plus exports minus imports.
Worked example (defaults, in billions): 15,000 + 4,000 + 4,500 + 2,500 − 3,200 = 22,800.
GDP can also be measured by adding all incomes earned in production: wages, proprietors' and rental income, corporate profits and interest, plus indirect business taxes, depreciation and net foreign factor income. In principle both approaches give the same total.
Nominal GDP uses current prices. Real GDP adjusts for inflation and shows true growth. GDP per capita divides by population and is a rough measure of living standards. GDP ignores unpaid work, inequality and environmental costs.
Is GDP the same as GNP? GNP counts output by a country's residents anywhere.
What is a recession? Often described as two quarters of falling real GDP.
Are transfer payments included in G? No, only purchases of goods and services.