Browse Definitions :
Definition

gross domestic product (GDP)

Contributor(s): Matthew Haughn

Gross domestic product (GDP) is the total amount of dollars made within a given location in the selling of all goods and services before deductions.

GDP can encompass a town, county, state or country. The period of time over which GDP is measured is variable but is commonly in fiscal quarters or years. Often, GDP is expressed as a percentage representing the increase or decrease over the previous year.

Commonly used by governments and economists to measure a region’s economic performance, GDP is a key measurement of welfare economics. If a country’s GDP is said to have grown by 4% in a year, that means the country’s economy has grown by 4%.

The measurement of GDP can be performed three different ways, but should all return approximately the same result. The three methods used to calculate a GDP include:

  • Production approach - Calculated by totaling output of enterprises.
  • Expenditure approach - Calculated by totaling the combination of goods consumed, government spending, investments and net total exports.
  • Income approach - Calculated by totaling employee compensation, corporate and non-incorporated firms’ gross profits and taxes, minus subsidies.

GDP was created as a measurement of economies by William Petty. The measurement was used to make certain landlords were not unduly taxed during the war between the English and Dutch (1652 to 1674). GDP was modernized by Simon Kuznets, who used it in a report to Congress in 1934. However, Kuznets explicitly warned against its use to measure the welfare (well-being) of citizens.

Criticisms of the GDP center around the idea that a healthy economy does not necessarily equate to the well-being of citizens. Critics argue that a better measure of how well a country is doing should include other metrics such as work-life balance, leisure time, health, poverty, crime, equality and the environment.

This was last updated in September 2017

Continue Reading About gross domestic product (GDP)

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.

-ADS BY GOOGLE

File Extensions and File Formats

Powered by:

SearchCompliance

  • PCI DSS (Payment Card Industry Data Security Standard)

    The Payment Card Industry Data Security Standard (PCI DSS) is a widely accepted set of policies and procedures intended to ...

  • risk management

    Risk management is the process of identifying, assessing and controlling threats to an organization's capital and earnings.

  • compliance framework

    A compliance framework is a structured set of guidelines that details an organization's processes for maintaining accordance with...

SearchSecurity

  • Trojan horse (computing)

    In computing, a Trojan horse is a program downloaded and installed on a computer that appears harmless, but is, in fact, ...

  • identity theft

    Identity theft, also known as identity fraud, is a crime in which an imposter obtains key pieces of personally identifiable ...

  • DNS over HTTPS (DoH)

    DNS over HTTPS (DoH) is a relatively new protocol that encrypts domain name system traffic by passing DNS queries through a ...

SearchHealthIT

  • telemedicine (telehealth)

    Telemedicine is the remote delivery of healthcare services, such as health assessments or consultations, over the ...

  • Project Nightingale

    Project Nightingale is a controversial partnership between Google and Ascension, the second largest health system in the United ...

  • medical practice management (MPM) software

    Medical practice management (MPM) software is a collection of computerized services used by healthcare professionals and ...

SearchDisasterRecovery

SearchStorage

  • M.2 SSD

    An M.2 SSD is a solid-state drive (SSD) that conforms to a computer industry specification and is used in internally mounted ...

  • kilobyte (KB or Kbyte)

    A kilobyte (KB or Kbyte) is a unit of measurement for computer memory or data storage used by mathematics and computer science ...

  • virtual memory

    Virtual memory is a memory management capability of an operating system (OS) that uses hardware and software to allow a computer ...

Close