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Gross Domestic Product (GDP)

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Gross Domestic Product (GDP)
  • can be calculated by adding up all of the money spent by consumers, businesses, and the government in a given period
  • it may also be calculated by adding up all of the money received by all the participants in the economy

GDP Formula

expenditure approach
  • GDP = Consumption + Investment + Government Spending + Net Exports
  • GDP = C + I + G + NX
    • C represents private-consumption expenditures by households and nonprofit organizations
    • I refers to business expenditures
    • G includes government investments
    • NX is total exports minus total imports

income approach
  • GDP = total national income + sales taxes + depreciation + net foreign factor income

value-added approach
  • GDP = gross value of output - value of intermediate consumption