Gross Domestic Product (GDP) is the total market value of all final goods and services produced within the territorial boundary of a country, using domestic resources, during a given period of time.
GDP Computation
- Expenditure Wise
- GDP = consumption + gross investment + government spending + (Export- Imports)
- GDP = C + I + G + (X – M)
- Income Approach
- compensation of employees
- property income
- production taxes and depreciation on capital
- Product Approach
- Real GDP or GDP at constant price : It is the value of today’s output at some base year. Real GDP is calculated by tracking the volume or quantity of production after removing the influence of changing prices or inflation. It reflects the real growth.
- Nominal GDP or GDP at current price : represents the total money value of final goods and services produced in a given year, where the values are expressed in terms of the market prices of each year. Simply it is the value of today’s output at today’s price.
Net Domestic Product (NDP)
NDP = GDP – Depreciation
Gross National Product (GNP)
GNP = GDP + NFIA(Net factor income from abroad)
Net National Product (NNP)
NNP = GNP – Depreciation
Net Domestic Product (NDP)
NDP = NNP – NFIA
National Income
NI = GDP – Depreciation + NFIA – Indirect Taxes + Government Subsidies