Explain What Is Gross Domestic Product(GDP)

Gross Domestic Product (GDP)

• Is the total market value of all final goods and services produced in a country in one year
• It is measure in terms of monetary value
• Only final product is being counted so as to avoid double counting

GDP is a key variable to economic performance because job opportunities and income of a country are closely related to production. Higher production indicates greater use of economic resources and as more inputs are used the income for resource suppliers will also increase together with the employment opportunities and vice-versa

GDP excludes:

• Purely financial transactions like public transfer payments such as pensions, private transfer payments such as money gifts and security transactions such as the sales of stocks and bonds since they not involve the actual production of goods and services.
• Second hand sales because they are not current output.