What is Gross Domestic Product (GDP) in the context of National Income Accounting?

The correct answer is The total value of all goods and services produced within a country's borders in a specific period.

Key Points

• Gross Domestic Product (GDP) represents the total market value of all final goods and services produced within a country during a specific period, usually a year or a quarter.
• It is a key indicator used to gauge the health of a country's economy and overall economic activity.
• GDP can be measured using three approaches: production (or output) approach, income approach, and expenditure approach.
• Real GDP is adjusted for inflation, providing a more accurate reflection of an economy's size and how it is growing over time.
• The growth rate of GDP is used to compare the economic performance of different countries or regions.

Additional Information

• Gross National Product (GNP):
  • GNP measures the total economic output produced by a country's residents, regardless of the location of the production.
  • It includes GDP plus income earned by residents from overseas investments minus income earned within the domestic economy by foreign residents.
• Net National Product (NNP):
  • NNP is derived by subtracting depreciation (the loss of value of capital goods over time) from GNP.
  • It represents the net value of goods and services produced by a country's residents.
• Purchasing Power Parity (PPP):
  • PPP is an economic theory that compares different countries' currencies through a "basket of goods" approach.
  • It is used to determine the relative value of currencies and to compare the cost of living between different countries.
• Per Capita GDP:
  • Per Capita GDP is the average economic output per person, calculated by dividing the GDP by the total population.
  • It is often used as an indicator of the standard of living and economic well-being of a country's residents.