GDP = C + G + I + NX .What Does Gross Domestic Product . though GDP is usually calculated on an annual basis.GDP Mean? The monetary value of all the finished goods and services produced within a country's borders in a specific time period.

(NX = Exports . or consumer spending.Imports) . "C" is equal to all private consumption. in a nation's economy "G" is the sum of government spending "I" is the sum of all the country's businesses spending on capital "NX" is the nation's total net exports. calculated as total exports minus total imports.

 GDP helps to understand the growth rate of the economy .  It shows the standard of living of the people. Gross Domestic Product is also called Gross Domestic Income.  It is the market value of all final goods and services made within the country.  GDP is a measure of a countries economic condition.

. It is useful because often the amount of goods a currency can purchase within two nations varies drastically. demand for the goods. then comparing that amount. difficult to determine factors. based on availability of goods. PPP solves this problem by taking some international measure and determining the cost for that measure in each of the two currencies.Purchasing power parity (PPP) is an economic technique used when attempting to determine the relative values of two currencies. and a number of other.

 PPP exchange rate (the "real exchange rate") fluctuations are mostly due to different rates of inflation between the two economies. Purchasing power parity (PPP) is a theory of long-term equilibrium exchange rates based on relative price levels of two countries. identical goods will have the same price in different markets. . the idea that in absence of transaction costs.  The concept is founded on the law of one price.

000 riel. For example.  The cost of a McDonald's Big Mac® sandwich can be determined in a number of countries. and 9. if a Big Mac® costs \$3 US Dollars (USD) in the US. and then an exchange rate can be concluded based on this index. the exchange rate can be determined as \$1 USD for 3.Ex.000 riel in Cambodia. . This indexed exchange rate would then be used to determine relative value of other items.