Gross Domestic Product (Gdp)

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1. INTRODUCTION Economic growth is measured in term of an increase in the size of a nation’s economy. A broad measure of an economy’s sizes its output. The most widely-used measure of economic output is the Gross Domestic Product called G.D.P. GDP per capita, in which total GDP is divided by the resident population, is often considered an indicator of the economic health as well as to gauge a country's standard of living but it is not a measure of personal income. 2. THE DEFINITION OF GDP The GDP is defined as the market value of all goods and services produced by a country over a specific time period and are used as a measurement of the size of a country's economy. The measurement of GDP is used to calculate the living standards in a country due to its importance in the calculation of how well the economy is performing. Usually, GDP is expressed as a comparison to the previous quarter or year. GDP is most often presented on an annualized percent basis. Most of the individual data sets will also be given in real terms, meaning that the data is adjusted for price changes, and is therefore net of inflation. 2.1 GDP Calculating Measuring GDP is complicated but at its most basic, the calculation can be done in one of three ways: • The product approach: Calculate the value of the output of goods and services produced in the economy over one year. It is also called as Net Product or Value added method. It calculated by sums the “value-added” at each stage of production, where value-added is defined as total sales less the value of intermediate inputs into the production process. • The Income approach: is calculated by adding up what everyone earned in a year as total compensation to employees, gross profits for incorporated and non incorporated firms, and taxes less any subsidies. • The expenditure method: is calculated by adding up

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