Gross domestic product
From ACT Wiki
(GDP).
A measure of the monetary value of total output of finished goods and services produced using factors of production located in the country whose GDP is being measured in the time period over which it is being measured.
It is commonly measured in three ways.
- An output measure: the value of goods and services produced by all sectors of the economy, often taken as agriculture, manufacturing, energy, construction, the service sector and government.
- An expenditure measure: the value of the goods and services purchased by households and governments, investment in machinery and buildings and exports minus imports.
- An income measure: the value of income generated mostly in terms of profits and wages.
In principle the three methods should produce the same answer, but they are each estimated in ways that are practical but not quite fitting the theory.
Indeed how the theory should be applied is often disputable.
Some of this is discussed in the article on inflation.
GDP equivalents can also be estimated for regions, or indeed the entire world.
- What’s not captured in GDP statistics?
- "GDP [ ] is not the whole story when gauging how well economies are doing.
- To begin with, some things have a lot of value but are not captured in GDP because no money changes hands...
- Finally, there are things which raise GDP that don’t make the country better off. War is one example (a lot of money is spent, so GDP goes up). Or if a large chunk of the Amazon rainforest was cut down in one week, then you’d get a sharp rise in GDP from the sales of timber but at huge environmental cost."
(What is GDP? Bank of England.)
See also
- Balance of payments
- Black economy
- Double dip
- Environmental concerns
- Genuine Progress Indicator (GPI)
- Gross fixed capital formation
- Gross National Income
- Gross national product
- Inflation - see 'Points to note'
- Office for National Statistics
- Product
- Real GDP
- Recession
