what is gross domestic product?

Question

rise in gross domestic product and indian economy

Answer 1

A region's gross domestic product, or GDP, is one of the several measures of the size of its economy. The GDP of a country is defined as the market value of all final goods and services produced within a country in a given period of time. Until the 1980s the term GNP or gross national product was used in the United States. The two terms GDP and GNP are almost identical. The most common approach to measuring and understanding GDP is the expenditure method:

GDP = consumption + investment + government spending + (exports − imports)
"Gross" means depreciation of capital stock is not included. With depreciation, with net investment instead of gross investment, it is the Net domestic product. Consumption and investment in this equation are the expenditure on final goods and services. The exports minus imports part of the equation (often called cumulative exports) then adjusts this by subtracting the part of this expenditure not produced domestically (the imports), and adding back in domestic production not consumed at home (the exports).

Economists (since Keynes) have preferred to split the general consumption term into two parts; private consumption, and public sector (or government) spending. Two advantages of dividing total consumption this way in theoretical macroeconomics are:

Private consumption is a central concern of welfare economics. The private investment and trade portions of the economy are ultimately directed (in mainstream economic models) to increases in long-term private consumption.
If separated from endogenous private consumption, government consumption can be treated as exogenous, so that different government spending levels can be considered within a meaningful macroeconomic framework.

[edit] The components of GDP
Each of the variables C, I, G and NX:

C is private consumption (or Consumer expenditures) in the economy. This includes most personal expenditures of households such as food, rent, medical expenses and so on.
I is defined as business investments in capital. Examples of investment by a business include construction of a new mine, purchase of software, or purchase of machinery and equipment for a factory. 'Investment' in GDP is meant very specifically as non-financial product purchases. Buying financial products is classed as saving in macroeconomics, as opposed to investment (which, in the GDP formula is a form of spending). The distinction is (in theory) clear: if money is converted into goods or services, without a repayment liability it is investment. For example, if you buy a bond or a share, the ownership of the money has only nominally changed hands, and this transfer payment is excluded from the GDP sum. Although such purchases would be called investments in normal speech, from the total-economy point of view, this is simply swapping of deeds, and not part of the real economy or the GDP formula.
G is the sum of government expenditures on final goods and services. It includes salaries of public servants, purchase of weapons for the military, and any investment expenditure by a government. It does not include any transfer payments, such as social security or unemployment benefits. The relative size of government expenditure compared to GDP as a whole is critical in the theory of crowding out, and the Keynesian cross.
X is gross export. GDP captures the amount a country produces, including goods and services produced for overseas consumption, therefore exports are added.
M is gross import. Imports are subtracted since imported goods will be included in the terms G, I, or C, and must be deducted to avoid counting foreign supply as domestic.
NX are "net exports" in the economy: gross exports - gross imports. There is a fixed relation: NX = X - M.
It is important to understand the meaning of each variable precisely in order to:

Read national accounts.
Understand Keynesian or neo-classical macroeconomics.

[edit] Examples of GDP component variables
Examples of C, I, G, & NX: If you spend money to renovate your hotel so that occupancy rates increase, that is private investment, but if you buy shares in a consortium to do the same thing it is saving. The former is included when measuring GDP (in I), the latter is not. However, when the consortium conducted its own expenditure on renovation, that expenditure would be included in GDP.

If the hotel is your private home your renovation spending would be measured as Consumption, but if a government agency is converting the hotel into an office for civil servants the renovation spending would be measured as part of public sector spending (G).

If the renovation involves the purchase of a chandelier from abroad, that spending would also be counted as an increase in imports, so that NX would fall and the total GDP is unaffected by the purchase. (This highlights the fact that GDP is intended to measure domestic production rather than total consumption or spending. Spending is really a convenient means of estimating production.)

If you are paid to manufacture the chandelier to hang in a foreign hotel the situation would be reversed, and the payment you receive would be counted in NX (positively, as an export). Again, we see that GDP is attempting to measure production through the means of expenditure; if the chandelier you produced had been bought domestically it would have been included in the GDP figures (in C or I) when purchased by a consumer or a business, but because it was exported it is necessary to 'correct' the amount consumed domestically to give the amount produced domestically. (As in Gross Domestic Product.).


[edit] Difference from aggregate expenditure
An alternative measure of the economy to GDP is the aggregate expenditure measure, which is identical to GDP except that it excludes items produced but not purchased (net inventory/stock level growth). If the economy produces more goods than are sold, the increase in inventory would generally be included in the GDP figure (as "Investment"). GDP counts these changes in inventory levels as investment.


[edit] The GDP income account
Another way of measuring GDP is to measure the total income payable in the GDP income accounts. This should provide the same figure as the expenditure method described above.

The formula for GDP measured using the income approach, called GDP(I), is:

GDP = Compensation of employees + Gross operating surplus + Gross mixed income + Taxes less subsidies on production and imports
Compensation of employees (COE) measures the total remuneration to employees for work done. It includes wages and salaries, as well as employer contributions to social security and other such programs.
Gross operating surplus (GOS) is the surplus due to owners of incorporated businesses. Often called profits, although only a subset of total costs are subtracted from gross output to calculate GOS.
Gross mixed income (GMI) is the same measure as GOS, but for unincorporated businesses. This often includes most small businesses.
The sum of COE, GOS and GMI is called total factor income, and measures the value of GDP at factor (basic) prices.The difference between basic prices and final prices (those used in the expenditure calculation) is the total taxes and subsidies that the Government has levied or paid on that production. So adding taxes less subsidies on production and imports converts GDP at factor cost to GDP(I).

Another formula can be written as this:

GDP = R + I + P + SA + W

R = rents
I = interests
P = profits
SA = statistical adjustments (corporate income taxes, dividends, undistributed corporate profits)
W = wages


[edit] Measurement

[edit] International standards
The international standard for measuring GDP is contained in the book System of National Accounts (1993), which was prepared by representatives of the International Monetary Fund, European Union, Organisation for Economic Co-operation and Development, United Nations and World Bank. The publication is normally referred to as SNA93, to distinguish it from the previous edition published in 1968 (called SNA68).

SNA93 sets out a set of rules and procedures for the measurement of national accounts. The standards are designed to be flexible, to allow for differences in local statistical needs and conditions.

India: Government of India Ministry of Statistics and Programme Implementation

Answer 2

GDP
Definition

Gross Domestic Product. The total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports. The GDP report is released at 8:30 am EST on the last day of each quarter and reflects the previous quarter. Growth in GDP is what matters, and the U.S. GDP growth has historically averaged about 2.5-3% per year but with substantial deviations. Each initial GDP report will be revised twice before the final figure is settled upon: the "advance" report is followed by the "preliminary" report about a month later and a final report a month after that. Significant revisions to the advance number can cause additional ripples through the markets. The GDP numbers are reported in two forms: current dollar and constant dollar. Current dollar GDP is calculated using today's dollars and makes comparisons between time periods difficult because of the effects of inflation. Constant dollar GDP solves this problem by converting the current information into some standard era dollar, such as 1997 dollars. This process factors out the effects of inflation and allows easy comparisons between periods. It is important to differentiate Gross Domestic Product from Gross National Product (GNP). GDP includes only goods and services produced within the geographic boundaries of the U.S., regardless of the producer's nationality. GNP doesn't include goods and services produced by foreign producers, but does include goods and services produced by U.S. firms operating in foreign countries.

Answer 3

Hi ankur!
I remember reading this in my 9th class in economics.You have asked a nice question.
Gross domestic product means the domestic income that has been generated over the year that is calculated.It doesn't take into account the income that the country earns from abroad.Gross domestic product is of two types:(a)Gross domestic product at market price(b)Gross domestic product at factor cost.

Answer 4

The total market value of goods and services produced within a nation during a given period (usually 1 year).


The components of GDP are consumption, gross investment, government purchases of goods and services, and net exports.

GDP differs from GNP (Gross National Product) because GNP also includes income arising from investment and assets owned abroad.

Per capita GDP is calculated by dividing the total Gross Domestic Product for a country by the number of people who live there. This allows comparison of GDP figures for different countries, taking into account population size.

Gross world product is the total Gross National Product of all the countries in the world. This also equals the total Gross Domestic Product.




GDP is Gross domestic product. For a region, the GDP is "the market value of all the goods and services producted by labor and property located in" the region, usually a country.



http://www.quickmba.com/econ/macro/gdp/

Answer 5

Gross Domestic Product is the total value of goods produced in a country before costs are taken out.

Answer 6

Gross Domestic Product or GDP
it is a monetary measure of the value at market prices of goods and services within the national economymeasured over a given period of time.

Answer 7

GDP -gross domestic product means total value of good and services taken into account for a give period{annually} without any duplication

Answer 8

What is Gross Domestic Product?

Gross domestic product , GDP as it is referred to is a measure of the total domestic economic activity. It is the sum of all the income earned by the production of goods and services of an economic territory. GDP is equivalent to the value added to the economy from the productive activities of Households, Government, Financial Corporations, Non-Financial Corporations, and Non-Profit Institutions Serving Households.

GDP is measured in three ways.

The final consumption of households, government plus investment plus net exports of goods and services.
the sum of gross value added by those who produce goods and services plus taxes and subsides on product.
the sum of wages salaries, compensation of employees, taxes less subsides plus gross operating surplus

http://www.stats.gov.lc/Na_Main/FAQ.htm

Answer 9

I think GDP means the total value of the total production of a country.Including each and every production of each and every house hold,within the country.

Answer 10

One word - Wikipedia - click the link in my sources