What Is GDP? How Is It Important To A Country?

Gross Domestic Product is abbreviated as GDP. It is sum of all of the economic goods which are giving benefits to the country in economic or monetary terms. It is important for a country overall because it tells about the present economic status of a country in world. A country with high GDP would be having improved and standard economy while a country with low GDP would be having low standard and poorly developed economy. At the very moment, America has highest GDP so it is called superpower. China is going to beat America's GDP in a couple of years then it would be the next superpower.
It is total consumption and investment along with government spending and imports but we need to subtract imports from exports before adding because it will balance the equation of GDP in this way. GDP can consider both of the private and public sectors as it has role of both of them. Both sectors are important in working for the progress of the country so we are not allowed to avoid the significance of one over the other. GDP can be measure by the help of two standards; national and international ones. National ones are at time unacceptable on international level so we should prefer international ones.

GDP stands for Gross Domestic Product. It is defined as the total value of all the services and goods manufactured in a country. Thus it can be considered as a measure of national income and output.

The mathematical formula for finding out GDP is as follows:

GDP = C+I+G+(X-M)

Where
C stands for consumption,
I stands for gross investments
G stands for Government spending
x-M stands for exports - imports

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A GDP is the Gross Domestic Product of an area. The GDP of a country is the market value of products that are manufactured within the country. In the United States it was earlier known as GNP (Gross National Product). The formula calculated for GDP is GDP = consumption + investment + government spending + (exports – imports).

Consumption and investment in the above equation refers to the expenses of the final product. The exports – imports is also known as the cumulative exports. This part of the equation is adjusted by subtracting the expenditure part of imports and adding the domestic production.

However, due to the complications this consumption is divided into two parts known as the private consumption and public sector.

Gross Domestic Product is the value of goods and services produced in the country during a year minus the value of inputs.

GDP= Total value of all the goods and services produced-Value of inputs.

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