What is Gross Domestic Product (GDP)?

Gross domestic product (GDP) is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period. As a broad measure of overall domestic production, it functions as a comprehensive scorecard of a given country’s economic health.

How do you calculate gross domestic product?

One way to calculate gross domestic product is comparing imports bought versus exports sold. A container ship heading into the United States port at Seattle, Washington. Gross domestic product, or GDP, represents the total dollar value of all goods and services produced in a country in a given period.

What is the difference between GDP and intermediate goods and services?

GDP represents the total monetary or market value of all final goods and services produced (and sold on the market) within a country's borders during a period of time (typically one year). Intermediate goods and services—those used in the production of final goods and services—are left out of GDP to prevent double-counting.

What is the rule that only currently produced goods and services should be counted?

The rule that only currently produced goods and services should be counted ensures that only production occurring in the course of a given year is included and that any transaction in which money changes hands but no good or service does so in return (so-called transfer payments, e.g., unemployment or social-security payments, gifts) is excluded.