Gross Domestic Product [GDP]

Gross Domestic Product (GDP) is the total monetary value of all finished goods and services produced within a country’s borders during a specific time period, typically calculated quarterly and annually. GDP serves as a comprehensive scorecard of a country’s economic health and is used to compare economic performance between countries. It can be calculated using three approaches: the production approach (adding up all value added), the income approach (summing all incomes earned), or the expenditure approach (totaling all spending). For example, the U.S. GDP in 2023 was approximately $27 trillion. GDP = C + I + G + (X – M), where C is consumer spending, I is business investment, G is government spending, X is exports, and M is imports. Real GDP adjusts for inflation, while nominal GDP uses current prices. A growing GDP indicates economic expansion, while declining GDP suggests contraction.