what is gdp

Gross Domestic Product (GDP) is a monetary measure of the market value of all the final goods and services produced in a specific time period by a country or countries. GDP is most often used by the government of a single country to measure its economic health. GDP is composed of goods and services produced for sale in the market and also includes some nonmarket production, such as defense or education services. GDP is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period. GDP provides an economic snapshot of a country, used to estimate the size of an economy and its growth. GDP is typically calculated on an annual basis, but it is sometimes calculated on a quarterly basis as well. GDP is adjusted for price changes and is, therefore, net of inflation. GDP is the standard measure of the value added created through the production of goods and services in a country during a certain period. It measures the income earned from that production, or the total amount spent on final goods and services (less imports) . GDP is a measure of all the activity of companies, governments, and individuals in a country. GDP helps businesses decide when to expand and hire more people, and lets the government work out how much it can afford to tax and spend. When an economy is growing, each quarterly GDP figure is slightly bigger than the previous three-month period. Most economists, politicians, and businesses like to see a steadily rising GDP because it usually means people are spending more, extra jobs are created, more tax is paid, and workers get better pay rises. When GDP is falling, it means the economy is shrinking, which is bad news for businesses and workers. If GDP falls for two quarters in a row, that is known as a recession.