What is the full form of GDP?
GDP full form is Gross Domestic Product. GDP is the total monetary or consumer worth of all final goods and services produced within a nation’s borders over a specified time period. It provides a precise measure of total domestic output and a complete assessment of a country’s economic health. When discussing the size of the economy, economists refer to GDP. The GDP growth rate is an important indicator of a nation’s economic growth. As a nation’s GDP rises, the living standards of its citizens likewise continue to rise. A country with a high GDP is seen as a desirable place to live. Agriculture, manufacturing, and services are three key contributors to India’s GDP.
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History of Gross Domestic Product
Between 1654 and 1676, William Petty introduced the concept of GDP to defend landlords against undue taxes by the English and the Dutch. Later, Charles Davenant refined this technique. Simon Kuznets originally devised their contemporary concept in 1934. After the 1944 Bretton Woods conference, it became the primary instrument for measuring a nation’s economy.
Different techniques for calculating GDP
There are a variety of methods for calculating a country’s GDP, and it’s vital to understand the many forms and their applications. The following are the three methods for calculating GDP.
Revenue System
The income technique estimates the total income received by production components, such as labor and capital, inside a country’s borders. based on the input method
GDP = A + T – S
Where
A = GDP at Factor expense
T = Taxes
S = Subsidies
Output System
The output approach calculates the market value of all domestically produced products and services. GDP is assessed at constant prices or actual GDP in order to avoid a skewed calculation owing to price level modifications. based on the output system
GDP = B – T + S
Where
B – GDP at a constant prize or real GDP
T – Taxes
S – Subsidies
Expenditure System
Includes testing expenditures on products and services incurred by all domestic individuals. based on the expense system
GDP = C + I + G + NX
Where
C – Personal consumption expenditure
I – Business investment
G – Government spending
X – Exports
M – Imports
NX = (X – M) which is a net export.
