What Is the Gross Domestic Product (GDP)?
It is the number that is looked at when talking about the “size” of an economy.
The Gross domestic product (GDP) is a monetary measure that represents the market value of all the finished goods and services produced in a specific time period, normally a year, within the geographic boundaries of a country.
As stated in the definition, the GDP is calculated by looking only at the final value of the product or service produced, it does not take into consideration, for example, the value of the parts that are included in the construction of a car, but just the market value of the final product. It is important to not take into consideration the other intermediate steps of production because it leads to double-counting.
From the GDP value, it is possible to calculate other derived measures that can help to better understand specific economic phenomena. Examples of these measures are the GDP per capita, the GDP per capita at purchasing power parity, or even other ratios like the debt-to-GDP ratio, the ratio between a country’s government debt and its gross domestic product.
In other cases, the value of the total GDP can be broken known into the contribution of each economic sector or industry and can be useful for the decision making of authorities…
