GDP: Gross Domestic Product
The total aggregate of the market value of all the goods, products and services produced within a specific duration of time in a country is called GDP. GDP stands for Gross Domestic Product. GDP allows us to estimate the size of the economy and overall economic health of a country which covers both growth and decline in the economy of a nation. GDP altogether specifies the living standard of the people of a specific country. i.e. as the GDP increases the living standard of the people of that country increases. A good country for living purposes is the one with a good amount or preferably high GDP. Three categories contributing to GDP in India are; industry, service sector and agriculture including allied services.
GDP Full Form
Introduction of GDP into the system first came to as a tool to defend landlords against unfair taxation between the Dutch and the English between 1652 and 1674. The concept was introduced by William Petty which was later on taken to a further height when Charles Davenant developed and refined it. In the year 1934, the first modern concept was refined by Simon Kuznets and in the year 1944 right after the Bretton Wood conference, it became a well-established tool to map the economy of a country.
How to calculate GDP
A lot many approaches shows us ways to appraise GDP but a simpler way is to sum the total of consumption, gross investment and government spending plus the value of exports, minus imports.
GDP = COE + GOS + GMI + TP & M ? SP & M
GDP = private consumption + gross investment + government spending + (exports ? imports)
Some of the different approaches to calculate GDP are:
- Production approach
- Income approach
- Expenditure approach
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