Gross domestic product (GDP) is the total value of all final services and goods that were produced in the country by its residents during the year. This value is expressed in prices of end customers and includes the results of the activities of all work units operating in the economic sector of a given country. In the world GDP ranking, the palm belongs to the United States of America.
Description of GDP
Gross domestic product is an important key quantitative indicator of economic development, which is used throughout the world to summarize the results of state economic activity, as well as its pace and level of development. Combination with other indicators allows the use of GDP to characterize various aspects of the economic process and analyze fluctuations in its conjuncture. In the absence of more suitable indicators of income and welfare, GDP is a "litmus test" of the standard of living of the country's population.
GDP as an indicator of the well-being of residents is considered a compromise solution, often used in international practice.
Typically, two methods are used to calculate gross domestic product. The first is the summation of all economic revenues of the state - namely, wages, rents, profits and interest on capital. The second is to summarize all the costs incurred for consumption, investment, net exports (minus imports), as well as government purchases of goods and services. In theory, the result of these calculations should be equal in both cases, since the costs of one side of economic relations are always incomes for the other side.
