Definition of GDP, concepts and methods of measurement.

Definition and concept of GDP


GDP (gross domestic product) is the market value of all produced within a country in a given period of final goods and services.




The 'flow' the only elements to measure the value of a given production period.

Only if it produced in one country to recognize all foreign nationals without distinction.

Only recognized the value of final produced goods and do not recognized trading of goods produced in the past.

One transaction is recognized any goods made or illegal underground economy that is going through the market can not be measured.

Intermediate goods and final goods are only accepted for production inputs are not accepted.

Goods as well as the intangible services are also included in the GDP calculation. Measurement is based on market value.



Three kinds of measurement of GDP

GDP is a value of the final product, by the sum of the added value, can be calculated as the sum of the elements income.


The value of the end product is a GDP itself. The end products are for direct consumption without being used as intermediate products.

Value added at each stage sales value - can be found in the intermediate costs. All the step-by-step combined value can be calculated GDP.

Factor income is divided by Labour expenses (wages), capital expenditures (rent), land expenses (rent), executive income (profit). It can be found all adding to GDP.




In fact, in reality the separation of the final goods and intermediate goods are working hard to add only final goods. Therefore, using the GDP obtained through the sum of the added value mainly.