Definition:

GDP stands for Gross Domestic Product. It is the most comprehensive measure of economic activity in a country, capturing the monetary value of all finished goods and services during a given time period.

Example:

US GDP for 2019 was $21.4 trillion.

Calculation(s):

GDP = C + I + G + (X – M), where

  • Personal consumption (C), all the stuff and services you and I spend money on every day
  • Investment (I), all the money businesses invest in equipment, buildings, technology, inventories and residential investment too
  • Government spending (G), everything the federal, state and local government spends
  • Net exports (X-M), or all the goods we export less all the goods we import

More Information:

GDP is a critical economic measure used to estimate the size, growth and overall economic health of countries as a whole.

« Back to Glossary Index