10.2 Measurement of GDP

Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period. _[3]

A country’s gross domestic product can be calculated using the following formula: GDP = C + G + I + NX. C is equal to all private consumption, or consumer spending, in a nation’s economy, G is the sum of government spending, I is the sum of all the country’s investment, including businesses capital expenditures and NX is the nation’s total net exports, calculated as total exports minus total imports (NX = Exports – Imports.) ^[3]

Example: ^[4]

Calculating the GDP using the Expenditures Approach with the hypothetical data:

GDP = C + I + G + NX
GDP = 3,657 + 741 + 1,098 + (673 – 704)
GDP = 3,657 + 741 + 1,098 – 31
GDP = 5,465

^{Measuring GDP [5]}