The Gross Domestic Product ( Gdp )

974 WordsFeb 3, 20164 Pages
The Gross Domestic Product (GDP) represents the monetary value of all the finished goods and services produced within a country 's geographic borders in a determined period of time. It is used as a quantitative measure of the total economic activity of a nation, and it is usually calculated on an annual basis. The GDP can be determined in three different ways: output or production measure, income measure, and expenditure measure. In theory, it should all give the same number. The output or production approach defines the GDP as the value of the goods and services produced by all sectors of the economy. It is calculated by adding the value of the total sales of goods, minus the intermediate consumption used to produce the final goods sold. The income approach of calculating GDP is defined as the total income earned by the factors of production within an economy. First, you should determine the National Income by adding all the wages, rents, interests, and profits earned within an specific period of time. Then, it is added the value of Sales Taxes, Depreciation and Net Foreign Factor Income, and the final result will be GDP. The expenditure approach identifies four possible destinations for the total production of an economy. This output can be consumed by households, businesses, the governmentor the foreign sector. That is why the GDP can be calculating by adding the total amount of the purchases made within an economy in a period of time. From this approach we can identify
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