eli5: What is the difference between GDP and the sum total of a country’s exports?
In: Economics
GDP is the sum value of all the stuff made in a country, regardless of if it was exported or if it stayed at home. The balance of trade is the sum of all the exports minus all the imports.
The trade deficit or surplus, is only one part of GDP, and is generally the smallest part. GDP is made up of 4 factors. Consumption, Net Trade, Government spending and Investments.
GDP is not exports. GDP is the money that moves around *in* the country as well as flowing in or out. GDP represents how much money there is and how much it moves, which when divided by the population subsequently represents how much the average person makes/spends in a year.
GDP represents the value of all the stuff a country makes. Exports is only the stuff a country sells to other countries.
Latest Answers