What is the full form of GDP
GDP: Gross Domestic Product
GDP stands for Gross Domestic Product. It is the total market value of all the goods, products and services produced within a country in a specific duration of time. It is used to measure the size of an economy and overall growth or decline in the economy of a nation. It indicates the economic health of a country as well as specifies the living standard of the people of a specific country, i.e. as the GDP increases the living standard of the people of that country increases. A country having good GDP is considered as a good country for living purpose. In India, there are three main sectors that contribute to GDP; industry, service sector and agriculture including allied services.
History
The basic concept of GDP was given by William Petty to defend landlords against unfair taxation between the Dutch and the English between 1652 and 1674. Later, this method is further developed by Charles Davenant. Its modern concept was first developed by Simon Kuznets in 1934. After the Bretton Woods conference in 1944, it became the main tool to measure the economy of a country.
How to calculate GDP
There are many approaches to calculate GDP. If we talk about a simple approach, it is equal to the total of consumption, gross investment and government spending plus the value of exports, minus imports.
Formula:
Or
Following are the different approaches to calculate GDP:
- Production approach
- Income approach
- Expenditure approach