Gross Domestic Product

Statement

Gross domestic product (GDP) is the market value of all final goods and services newly produced within the geographical boundary of an economy in a given period of time (usually a year).

Notes

The defining feature is the geographical boundary: GDP counts output produced inside the economy’s borders, whoever owns the resources — in contrast to gross national income, which counts by ownership of resources. Only final goods and services are counted, to avoid double-counting the intermediate goods embodied in them. Measured by the expenditure method, nominal GDP is the sum of the aggregate demand components, $\text{Nominal GDP} = C + I + G + (X - M)$. Whether GDP is stated in nominal or real terms, and per capita or in aggregate, changes what it can be used to show.