What is GDP?
Gross Domestic Product (GDP) is total market value of all final goods and services produced within a country and within particular time period.
There are two types of GDP
Nominal GDP :- Current year production valued at current year price.
Real GDP :- Current year production valued at base year price.
How GDP is Calculated?
Real GDP calculation are used to find a certain real growth because it is inflation adjusted.
Gain from re-sale are excluded but services provided by the agent are counted in GDP calculation.
Transfer payment are excluded as the income received but no income or services occurred.
3 Approaches of GDP
Output Approach :- It add total market value of final good and services.
Income Approach :- It basically is what the factor of production earn wages of labour, profit of enterprize, land-rent, interest etc.
Income method measures the some total of all payments received by production.
Expenditure Approach :- In this approach, the total value of spending get firms recover for the final good and services which they produce.