Gross Domestic Product (GDP) can be estimated in three ways which, in theory, should yield identical figures. They are
(1) Expenditure basis: how much money was spent,
(2) Output basis: how many goods and services were sold, and
(3) Income basis: how much income (profit) was earned.
These estimates, published quarterly, are constantly revised to approach greater accuracy. The most closely watched data is the period to period change in output and consumption, in real (inflation adjusted) terms. If indirect taxes are deducted from the market prices and subsidies are added, it is called GDP at factor cost or national dividend. If depreciation of the national capital stock is deducted from the GDP, it is called net domestic product. If income from abroad is added, it is called gross national product (GNP). The main criticisms of GDP as a realistic guide to a nation's well-being are that
(1) it is preoccupied with indiscriminate production and consumption, and
(2) it includes the cost of damage caused by pollution as a positive factor in its calculations, while excluding the lost value of depleted natural resources and unpaid costs of environmental harm.
Use this term in a sentence
The increase in the developing nation's gross domestic product last year encouraged foreign investors to continue assisting in the buildup of infrastructure.
The American economy started to suffer once the gross domestic product dropped below the amount of imports coming into the country.
The finance ministers were under a lot of pressure to improve the country's economic situation and, for that reason, they focused on their nation's gross domestic product and how they could improve it.