Gross Domestic Product (GDP)
Definition of 'Gross Domestic Product (GDP)'
The GDP is calculated by adding up the value of all final goods and services produced within a country's borders in a given period of time. Final goods and services are those that are sold to the end user, rather than being used as inputs into other products or services.
The GDP is a broad measure of economic activity, and it can be used to track the overall health of an economy. A growing GDP indicates that the economy is expanding, while a shrinking GDP indicates that the economy is contracting.
The GDP can also be used to compare the economic performance of different countries. Countries with a higher GDP per capita are generally considered to be more prosperous than those with a lower GDP per capita.
The GDP is not without its limitations. For example, it does not take into account the distribution of income within a country. A country with a high GDP may have a large number of people living in poverty, while a country with a lower GDP may have a more equitable distribution of income.
Additionally, the GDP does not take into account environmental factors. A country with a high GDP may be doing damage to the environment, while a country with a lower GDP may be more sustainable.
Despite its limitations, the GDP is a valuable tool for understanding the economic health of a country. It is a broad measure of economic activity that can be used to track the overall health of an economy and to compare the economic performance of different countries.
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