Gross Domestic Product

The gross domestic product (GDP), which is the total value of all products and services
produced in a nation in a particular time, is one approach that may be used to assess a country's
economic development and, therefore, success; however, it is not always the most accurate
measure (BYJUS, 2021). In the broadest sense, GDP shows how big a country's economy is. The
Gross Domestic Product (GDP) is often used to measure the economic growth of a nation. If the
figure is high, government officials consider the economy to be doing well. The gross domestic
product (GDP) is a widely used indicator of a country's prosperity (Amadeo, 2022). The Gross
Domestic Product (GDP) may be calculated in three distinct ways, each of which is used by
economists. In principle, these many methods all lead to the same conclusions.
 Expenditure Method
 Income Method
 Product Method.
1.
Demand is done by individuals and households in the economy. The demand for goods
and services is driven by the private sector, namely households. It accounts for over 70% of the
economy's total expenditures. The formula to calculate the GDP under Expenditure Method is:
GDP= C+I+G+(X-M)
Where, C refers to the consumption made by the households, I refers to the expenditure made by
the entrepreneurs and business firms, G refers to the government expenditure, X refers to the
import, M refers to the Export. (X-M) refers to the net export.
I. Consumption Expenditure
The expenditure done by the consumer on the durables and non-durables commodities.
Durables are ones which last longer i.e. assets, buildings, car, furniture etc. Non-Durables are
ones which are consumed in a certain time period i.e. perishable products, like vegetables
and fruits.
II. Investment Expenditure.
Investment is made in both variable and fixed elements of production, such as machinery,
transport, labor, raw materials, equipment, etc., and other varied factors of production that
are required in production.
III. Government Expenditure
To ensure the well-being of its citizens, the government spends a large amount of money on
defense, law enforcement, infrastructure development, general administration, and the social
sector.
IV. Net Export
 Difference between the one nations export versus its imports. When a country's net exports
are positive, it has a trade surplus, and when they are negative, they have a trade deficit. In
this sense, a country's net exports may be seen of as a subset of its trade balance.
2.