The Gross Domestic Product of a country. What does it mean, how is it calculated and is it important? I’ve never really gotten it
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It is a measure of the economic activity (production of goods and services) within a country. It isn’t necessarily very precise if a country has a large black market or barter trade. It can be used to gauge the size of an economy and is somewhat indicative of how productive and the potential income levels of the citizens.
Method of calculation is complex – broadly it can be calculated by adding the income of all the participants or alternatively by measuring the expenditure of all the participants – netting out exports and imports.
Is it important – yes as a broad macroeconomic indicator. It is a simple measuring stick but any deep analysis of an economy requires much better economic data (GDP is too broad and simple). But it isn’t super important otherwise and certainly not much importance for everyday people doing everyday things.
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