Question

What is gdp?? what is use of it? ​

Answer 1

Answer:

GDP is one of the most common indicators used to track the health of a nation's economy. The calculation of a country's GDP takes into consideration a number of different factors about that country's economy, including its consumption and investment.

GDP is perhaps the most closely-watched and important economic indicator for both economists and investors alike because it is a representation of the total dollar value of all goods and services produced by an economy over a specific time period. As a measurement, it is often described as being a calculation of the total size of an economy. GDP is also a key factor in using the Taylor rule, which is a primary method used by central bankers to evaluate economic health and set the target interest rates in an economy.

KEY TAKEAWAYS

1. Gross domestic product tracks the health of a country's economy.
2. It represents the value of all goods and services produced over a specific time period within a country's borders.
3. Economists can use GDP to determine whether an economy is growing or experiencing a recession.
4. Investors can use GDP to make investments decisions—a bad economy means lower earnings and lower stock prices.

What Is GDP?

Gross Domestic Product defined as GDP is the monetary value of all the finished goods and services produced within a country's borders in a specific time period and includes anything produced by the country's citizens and foreigners within its borders. It is primarily used to assess the health of a country's economy.

According to the International Monetary Fund, in 2019, the United States is the world's largest economy, followed by China and Japan.1

The GDP of a country is calculated by adding the following figures together: personal and public consumption; public and private investment; government spending; and exports (less imports).

The figure is generally expressed as a percentage because it is expressed as a percentage change from one period to the next (where the time period is typically quarterly or yearly). The figure is reported in the United States on a quarterly basis by the Bureau of Economic Analysis. While quarterly growth rates are a periodic measure of how the economy is faring, annual GDP figures are often considered the benchmark for the overall size of the economy.

Measuring GDP

There are three primary ways of calculating GDP: first, by adding up what everyone earned in a year (known as the income approach) or by adding up what everyone spent in a year (the expenditure method). Logically, both measures should arrive at roughly the same total.

The income approach, which is sometimes referred to as GDP(I), is calculated by adding up total compensation to employees, gross profits for incorporated and non-incorporated firms, and taxes less any subsidies. The expenditure method is the more common approach and is calculated by adding total consumption, investment, government spending, and net exports.

Finally, GDP can equivalently be measured based on the value of goods or services produced in an economy over the course of the year (the production or output approach). Because economic output requires expenditure and is, in turn, consumed, these three methods for computing GDP all arrive at the same value.

In general, the following simplified equation is often employed to calculate a nation's GDP:

GDP for Economists and Investors

GDP is an important measurement for economists and investors because it is a representation of economic production and growth. Both economic production and growth have a large impact on nearly everyone within a given economy. When the economy is healthy, there is usually a lower level of unemployment, and wages tend to increase as businesses hire more labor to meet the growing demand of the economy. Economists look at positive GDP growth between different time periods (usually year-to-year) to make an assessment of how much an economy is flourishing. Conversely, if there is negative GDP growth, it may be an indicator that an economy is in a recession, or approaching a recession or an economic downturn.

Investors pay attention to the GDP because a significant percentage change in the GDP–either up or down–can have a significant impact on the stock market. In general, a bad economy usually means lower earnings for companies. And this can translate into lower stock prices.

Investors may pay attention to positive and negative GDP growth when they are devising an investment strategy. However, it's important to note that because GDP is a measurement of the economy in the previous quarter or year, it is better used to help explain how economic growth and production have impacted your stocks and your investments in the past. It is not considered a helpful predictor of how the market will move in the future.

Answer 2

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What is gdp?

Gross Domestic Product, abbreviated as GDP, is the total value of goods and services produced in a country. GDP in economics: GDP is measured over specific time frames, such as a quarter or a year. GDP as an economic indicator is used worldwide to show the economic health of a country.

What is the Use of It ?

GDP measures the monetary value of final goods and services—that is, those that are bought by the final user—produced in a country in a given period of time (say a quarter or a year). It counts all of the output generated within the borders of a country.

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