The Full Form of GDP in economics is Gross Domestic Product
The Full Form of GDP is Gross Domestic Product and GDP is the aggregate monetary value of all final goods and services produced within a country during a period of time. Nominal GDP estimates are commonly used to determine the economic performance of a whole country or region, and to make international comparisons.
What is the Meaning of GDP?
For a nation, the GDP can be calculated by adding up its total production (what it produces and sells) inside the border of the country. This measure is often used to find out how healthy a country is. So, GDP per capita is often considered an indicator of a country’s standard of living.
Besides the full form of GDP, we will be going to discuss the calculation method of GDP and what to exclude while calculating the GDP of a country.
Read also: What is the Full Form of OK
How to Calculate GDP?
The formula for calculating the Gross Domestic Product is:
GDP=C+I+G+(X−M)
Written out, the equation for calculating GDP is:
GDP = private consumption + gross investment + government investment + government spending + (exports – imports).
For the gross domestic product, “gross” indicates that the GDP calculates the production regardless of the multiple uses to which the product can be put. Production can be used for direct consumption, for investment into fixed assets or inventories, or for switching fixed assets that have depreciated. “Domestic” expresses that the calculation of GDP contains only productions from within a nation.
The components used to calculate GDP include:
Consumption:
- Durable goods (goods expected to last over three years)
- Nondurable goods (food and clothing)
- Merchandises and Services
Government Expenditures:
- Defense
- Roads
- Schools
Investment Spending:
- Nonresidential (expenditure for plants, machinery, and equipment), Residential (single-family and conjoined-family homes)
- Business inventories
Net Exports:
- Exports are added to GDP
- Imports are deducted from GDP
The GDP report also measures the information regarding inflation of the country:
- The implicit price deflator measures the changes in prices and expenditure patterns.
- The fixed-weight price deflator measures price changes for a fixed basket of over 5,000 goods and services.
Calculation of GDP by Sum of Expenditure, Factor Incomes or Output
Calculating the rate of growth of national income is important for measuring the actual rate of economic growth, changes to living standards and changes to the income distribution between groups within the population.
| GDP (Expenditure) | GDP (Factor Incomes) | GDP (Value of Output) |
|---|---|---|
| Consumption | Income from people in jobs and in self-employment (eg. wages and salaries) | Value Added from each of the main economic sectors |
| Government spending | Profits of private sector businesses | These sectors are – Primary – Secondary – Manufacturing – Quarternary |
| Investment spending | Rent income from the ownership of land | |
| Change in value of stocks | ||
| Exports – Imports | ||
| = GDP (known as aggregate demand) |
The Expenditure Approach to Calculate GDP
A method of calculating GDP that measures the amount spend on all final goods during a given period.
The Income Approach to Calculate GDP
A method of calculating GDP that measures the income–wages, rents, interest, and profits–received by all factors of production in producing final goods.
What to Exclude to Calculate the GDP
Some specific income or production can not be added while calculating the GDP. Here is the list that can not be included in calculation of GDP:
- Products that are not produced for trading or business in the commercial center/marketplace
- Unpaid work: works done inside the family and the charitable efforts, and so on.
- Non-money related remunerated work
- Bargained merchandise and goods
- Illegal business
- Transfer installments
- Selling of utilized products
- Standard or raw merchandise and services that are used to generate other final products and services.
Top 10 Countries by GDP in 2020
We have prepare the top 10 country list by their Gross Domestic Product. The base year is 2019.
| SN | Country | GDP in 2019 |
|---|---|---|
| 1 | United States | U.S. Nominal GDP: $21.44 trillion U.S. GDP (PPP): $21.44 trillion |
| 2 | China | China Nominal GDP: $14.14 trillion China GDP (PPP): $27.31 trillion |
| 3 | Japan | Japan Nominal GDP: $5.15 trillion Japan GDP (PPP): $5.75 trillion |
| 4 | Germany | Germany Nominal GDP: $3.86 trillion Germany GDP (PPP): $4.44 trillion |
| 5 | India | India Nominal GDP: $2.94 trillion India GDP (PPP): $10.51 trillion |
| 6 | United Kingdom | U.K. Nominal GDP: $2.83 trillion U.K. GDP (PPP): $3.04 trillion |
| 7 | France | France Nominal GDP: $2.71 trillion France GDP (PPP): $2.96 trillion |
| 8 | Italy | Italy Nominal GDP: $1.99 trillion Italy GDP (PPP): $2.40 trillion |
| 9 | Brazil | Brazil Nominal GDP: $1.85 trillion Brazil GDP (PPP): $3.37 trillion |
| 10 | Canada | Canada Nominal GDP: $1.73 trillion Canada GDP (PPP): $1.84 trillion |
I hope you have got the full form of GDP. Also, this article will help you to understand the Gross Domestic Product’s feature, calculation method, and other basic information. Keep visiting our website for more Full Form of various abbreviated terms of economy, technology, science and many more. Thank you.
