what is GDP?

 

 HOW DO YOU MEASURE THE SIZE OF AN ENTIRE ECONOMY ?

 let's say i buy a coffee here in Hyderabad for  RS 15 

those  RS 15 are factored into the India's GDP 

In fact most of what's around you is part of GDP 

GDP  is an important gauge of the overall health of an economy . Its stands for gross domestic product

simply puts , GDP measures the total valve of all goods and services in a country . that means it measures a lot of stuff  worth  a lot of money.

 2019, GDP in India was at around 2.59 trillion U.S. dollars. 

In the  US , the world's biggest economy , It's around $ 19 trillion every year. 

HOW DO YOU GET THESE NUMBERS  ?

 well  you calculate GDP in a few different ways , but the commonly used this equation goes like 

   

GDP = C+ I+ G+ NX

C= CONSUMPTION

I= INVESTMENT

G= GOVERNMENT SPENDING

NX =NET EXPORTS

CONSUMPTION  is another way of saying consumer spending. it's the money you or i spend on physical goods like coffee , and on services like haircut .

in many developed countries like the us or the uk , consumer spending makes up more than half of a country's GDP.

INVESTMENT this measures how much business spend on this things like buildings , land and equipment . It also includes a major consumer investment buying a home .

GOVERNMENT SPENDING :

this is the money local state and national governments spend on things like roads, schools and defense .government spending varies a lot of depending on each country's approach to public goods and services .

in France government spends roughly 56% of GDP.

NET EXPORTS :

A LOT of countries have negative net exports meaning they brings in more products  than they  send out.

exports -imports =net exports 

two consecutive quarters of negative GDP growth rate are referred to as  a recession .

but GDP does'nt always give a full picture of the economy.

 some experts have come up with alternative measures to GDP that measure over all happiness and quality of life.