GDP

ChatGPT said:

GDP (Gross Domestic Product) is the total monetary value of all goods and services produced within a country’s borders over a specific time period, usually measured quarterly or annually. It is one of the most commonly used indicators of a country’s economic health and size.

Key Points:

1. What it Measures:
   • The total output of an economy.
   • Includes consumer spending, business investment, government spending, and net exports (exports minus imports).
2. Types of GDP:
   • Nominal GDP: Measured using current prices, not adjusted for inflation.
   • Real GDP: Adjusted for inflation, showing true growth over time.
   • Per Capita GDP: GDP divided by the population, indicating average income per person.
3. Components (Expenditure Approach):
   • C – Consumption (spending by households)
   • I – Investment (by businesses)
   • G – Government spending
   • NX – Net exports (exports – imports)
   Formula:
   GDP = C + I + G + (X - M)
4. Why It Matters:
   • Indicates the size and performance of an economy.
   • Used by governments and central banks to guide policy.
   • Helps compare the economic productivity of different countries.
5. Limitations:
   • Doesn’t measure inequality, environmental costs, or quality of life.
   • Excludes informal or black-market activities.
   • Doesn’t reflect unpaid work (like household labor).

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