Gross Domestic Product (gdp)

It is the final value of all final goods and services produced within the boundary of a nation during one year period. It measures the market value of all the goods and services produced within the borders of the country.
  • It is the most used method of National Income Accounting.
  • Per annum percentage change in it is the ‘growth rate’ of an economy.
  • It is a ‘quantitative’ concept and its volume/size indicates the ‘internal’ strength of the economy.
  • It is used by the International Monetary Fund (IMF)/World Bank (WB) in the comparative analyses of its member nations.
  • It is not a qualitative concept. It talks only about Growth but not Development.
  • GDP does not include several factors that influence the standard of living such as Externalities (for example- pollution); Nonmarket transactions (such as household production, bartering of goods and services, and volunteer or unpaid services); Non-monetary economy (for example- Bartering), domestic works, Child rearing); Technological improvements; Sustainability of growth; wealth distribution etc.
  • Salaries earned by foreign employees in any Indian state are included in India’s GDP.
  • Salaries earned by Indian employees in any foreign country are not included in India’s GDP.

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