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What is GDP, how is it calculated?

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What is GDP, how is it calculated?
posted Jun 27, 2017 by anonymous

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1 Answer

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Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. Though GDP is usually calculated on an annual basis, it can be calculated on a quarterly basis as well.

Key point to calculate GDP

  • The following equation is used to calculate the GDP: GDP = C + I + G + (X - M) or GDP = private consumption + gross investment + government investment + government spending + (exports - imports).
  • Nominal value changes due to shifts in quantity and price.
  • In economics, real value is not influenced by changes in price, it is only impacted by changes in quantity. Real values measure the purchasing power net of any price changes over time.
  • Real GDP accounts for inflation and deflation. It transforms the money-value measure, nominal GDP, into an index for quantity of total output.
answer Jun 29, 2017 by Raghav Choudhary
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