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Economics GDP Formula

Gross Domestic Product (GDP), is the total market value of goods and services produced by an economy (a nation)during a specific period of time, usually a year.

It can also be calcuated by the sum of value added at every stage of production of all final goods and services.

The most common approach to calculating GDP is by expenditure:

GDP, or Yd = Consumption
+ Investment
+ Government spending
+ (eXports - iMports)

where X - M = Net emports.

Therefore more precisely:

GDP = C + I + G + N

And there are 2 other approaches to calculate GDP:

  • Calculate by production: formula consists of all the market value of goods and services produced
  • Calculate by household income: formula that sums up all household income received to come to economic GDP

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