Gross Domestic Product (GDP)

A measure of the income and expenditures of an economy.ORGDP is the monetary measure of the total market value of all final goods and services produced within a country in one year.

Money valuation allows the summing of all goods in different units so it acts as the common denominator.

GDP includes all items should be:1)produced in the economy 2)legally sold in markets

Those have been purchased for final use and not for resale or further processing. Example:inputs in the production=not considered final output, but intermediate products

1) to calculate only final output.
2) to follow the value added approach.

The increase in value that a firm contributes to a product or serviceORValue of Sales - Intermediate goods

By subtracting intermediate goods from the value of its sales.

1)Tangible GoodsExample:food,clothing,car2)Intangible Goods
Example:Haircuts,Housecleaning,Doctor visits

Calculate only:1)Final output2)Value-added

1)concerned only with new, or current, production. 2)not what was actually sold.

1)Existing assets or property that sold or transferred, including used items, are not counted.
2)Purely financial transactions are excluded.
3)Public transfer payments, like social security or cash welfare benefits.
4)Private transfer payments, like student allowances or alimony payments.
5)The sale of stocks and bonds represent a transfer of existing assets. (However, the brokers’ fees are included for services rendered.)
6)Secondhand sales are excluded, they do not represent current output.

It measures the value of production within the geographic confines of a country.

It measures the value of production that takes place within a specific interval of time, usually a year or a quarter.