Gross domestic product
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.