Dear Readers, at the commencement of this article I am are very happy to share with you the full form of GDP and formula for calculating Gross Domestic Product of a country
And additionally a insights into the key takeaways, measurements and a touch of Indian GDP-Gross Domestic Product construct
What is the full form of GDP ?
So what does GDP stands for?
GDP – “Gross Domestic Product” and represents the entire price of all the finished product and services created inside a country during a specific time period measure (typically one year)
As a broad indication of overall domestic production, it functions as a comprehensive card of the country’s economic health
Let’s think of Economy like a giant Super Market with millions of goods starting from grocery items to electronics to large home appliances.
And every time a finished product or services is sold will bring up a price and at the end of the year will bring up the total,THAT’s the Gross Domestic Product (GDP) of that super market !!
So, basically it provides an financial synopsis in nursing monetary summary of a country, which is used to estimate the dimensions of associate in nursing economy and its rate of growth
Though it would have limitations, it’s a really vital and necessary tool to guide policymakers, investors, and company business homes in strategic higher cognitive process
It may be calculated in 3 ways, victimization expenditures, production, or incomes. It may be adjusted for inflation and population to supply deeper insights
Basics of GDP – Gross Domestic Product
GDP comprises all of the Private and Public consumption, Government outlays, Investments, additions to private inventories, paid-in construction costs, and the Foreign balance of trade
Foreign Balance of trade is – (exports are added, imports are subtracted)
Formula to Calculate
GDP = C + G + I + NX
i.e (Consumption + Government spending + Investment + NX) (NX is exports – imports)
India – GDP (Gross Domestic Product) Composition Breakdown
Here is the dipiction of India’s Gross Domestic Product Composition Breakdown
What are the different types of measurements:
Is the measurement of the raw data.
It is derived on more inclusive and larger parameters , where it takes into account the impact of inflation and allows comparisons of economic output from one year to the next and other comparisons over a period of time
GDP growth rate
It is the increase in GDP from one quarter to another quarter
GDP per capita
It measures GDP per person in the countrywide population; it is a useful way to compare GDP data between various countries
Balance of Trade
Balance of Trade is one of the key components of a country’s (Gross Domestic Product) formula.
It increases when the total value of goods and services that domestic producers sell to foreigners exceeds the total value of foreign goods and services that domestic consumers buy, otherwise known as a trade surplus
And if domestic consumers spend more on foreign products than domestic producers sell to foreign consumers — a trade deficit—then GDP decreases
So to balance or keep the trade deficit in control – a lot of thrust on Make in India Initiatives and policies from the Government
Brief about GDP – Gross Domestic Product !!
The first fundamental concept of GDP was invented at the end of the 18th century.
And the modern concept was developed in 1934 by the American economist Simon Kuznets and adopted as the main measure of a country’s economy at the Bretton Woods conference in 1944
GDP is the most commonly used measure of economic activity.
Though the GDO is usually calculated on an annual (yearly) basis, it can also be premeditated on a quarterly basis
In the United States, for example, the government releases an annualized Gross Domestic Product (G D P) estimate for each quarter and also for an entire year.
Most of the individual data sets will also be given in real terms, meaning that the data is adjusted for price changes, and is, therefore, net of inflation