What is gross domestic product?

Question

What is gross domestic product?

Answer 1

The total value of all goods and services produced within a particular country.

Answer 2

It is the total output of an economy, measured by:

Y = C + I + G (For closed economy)

Where Y = Output, C = Consumption, I = Investment, G = Government Spending.

It is known that output = expenditure. Hence GDP is also known as the Aggregate Expenditure. For open economy, there is one more component known as the net export,

Given, net export = X - M

Where X = export, M = Import.

Hence, for open economy, the GDP may be summarize by the following equation:

Y = C + I + G + X - M