Gross Domestic Product: What It Is and What It Means

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Gross Domestic Product: What it Is and What it Means Almost any substantial economic report or forecast will mention the words "Gross Domestic Product" or more commonly "GDP" at least once, if not a dozen times, citing it as an important measure and/or predictor of economic growth and health. Because the term is so frequently used, it might be easy to identify as something of especial importance in large-scale economic considerations, but that does not mean that the term or what it describes is well understood. The following paragraphs present a brief overview of what economists, reporters, and politicians are talking about when they refer to GDP, and how this measurement can be used to assess and predict large-scale economic events and trajectories. Gross Domestic Product (GDP hereafter) is, simply put, a measure of the overall size of an economy expressed as a numerical value, and there are three ways to measure GDP that should all theoretically deliver the same value when applied to the same economy (Curry, 2011). First and most commonly, GDP can be measured as the total value of all goods and services produced across all sectors of an economy, from private businesses to government spending this is known as an output measure (Curry, 2011; Amadeo, 2012). Second, GDP can be derived as a measure of expenditure, totaling the value of all goods and services consumed or paid for within an economy, including the value of all exports less the value of all imports, meaning
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