Gross domestic product (GDP) - Financial definition
Financial acronyms
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Concise definition of the term gross domestic product
Gross domestic product is the market value of all final goods and services produced by all the people and companies within a country's boundaries.
Comprehensive definition of the term gross domestic product
Calculation of the GDP
GDP is calculated using the following formula:
C + I + G + (X-M)
where:
C = personal consumption
I = investment expenditures
G = government spending
X = Exports M = Imports
C = personal consumption
I = investment expenditures
G = government spending
X = Exports M = Imports
Types of GDP
Nominal GDP
The nominal GDP is measured at current market prices, that means it includes price increases.
Real GDP
In order to be able to compare economic output from one year to another in a meaningful way, the effects of inflation are neutralized using a price deflator.