GDP - Definition, Full-Form & Meaning

What is GDP?

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This question must have arisen in the mind of many of you. Let us tell you what is GDP.

By the way, you probably know that GDP shows our economy.
Friends, do you know where did the word GDP come from? Its use is in our economy, so let us know today?

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Definition of GDP?

The term GDP was first used by American economist Simon during 1935-44, this term was introduced by Simon in America, and this was the period when the world’s banking institutions were handling the task of forecasting economic growth. , and most of them did not know anything about this word, but when Simon defined the term GDP in the US Congress with this term, then IMF i.e. International Monetary Fund started using this term. and gradually it spread to the rest of the country as well.

Information about GDP GDP is used to understand the level of development of the economy of any country. The economy of that country is considered good when its GDP is good. If there is a fall in the GDP of a country, then the economy of that country is not considered good, whose all the blame is given to the government of that country because the government of the country determines the economic policy of its country.

GDP Full Form

gdp

The full form of GDP is “Gross Domestic Product”, which we call GDP in Hindi, and we use it to measure the economy of any country, such as goods and services produced within the borders of any country. What is the market value of If its value is high then more foreign exchange will come to the country, which accelerates the pace of development of the country and if the value of the goods produced in that country is less then the economic condition of that country is not good?

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So we can say that GDP is used to measure the economic condition of any country. This is the scale of economic condition, the economic condition of the country is measured every three months, such as agriculture, industry and services come under GDP, and when the production in these sectors increases and decreases, then we will be based on this. But the GDP rate is fixed.

Agriculture, industry and services are the three major components of GDP. The GDP rate is fixed on the basis of the average increase or decrease in production in these areas.
Now you must be thinking that how GDP is calculated, how is it formed??
GDP = Private Consumption + Gross Investment + Government Investment + Government Expenditure + (Exports – Imports) GDP

GDP Formula?

You can measure inflation using this formula. To calculate it, real GDP is divided by unreal (nominal) GDP and multiplied by 100.

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Gross Domestic Product (Total Domestic Product) = Consumption + Total Investment

GDP = C + I + G + (X – M)

C stands for – Consumption (all private consumer spending within the national economy)
Meaning of I – Sum of country’s investments
G stands for Total Government Expenditure
Meaning of X – Country’s total exports
M means – Total Import Consumption of the country Consumption refers to the amount that is spent by the person for the goods used by the person such as rent, food, and medical expenses, it does not include the new house.

Gross Investment?

Through gross investment, the total expenditure made by all the entities of the country within the country’s limits is calculated.

GDP from the common people is directly related to the economic development and condition of the country, so GDP also affects the common people, if the GDP figures are not good then it will show the economic crisis of the country, and also if GDP is low. If the average income of the people also decreases, which people come below the poverty line, and jobs are also less available, companies start firing their employees, and then people’s savings and investments also decrease.

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How is it assessed?

GDP is measured through four important components.

The first component ‘consumption expenditure’, refers to the total expenditure of people to purchase goods and services.

The second one is ‘Government Expenditure’.

The third is ‘Investment Expenditure’.

Net exports come in the fourth.

GDP is measured in nominal and real terms, in nominal terms it is the value of all goods and services at current prices, when you adjust it relative to inflation for a base year, we get Real GDP ( Actually, we usually consider real GDP as the growth of the economy.

Although GDP data is collected from eight sectors, these include agriculture, manufacturing, electricity, gas supply, mining, quarrying, forestry and fisheries, hotels, construction, trade and communication, financing, real estate and insurance, and business services. and community, social and public services.

Importance of General Public?

GDP is important for the general public because it proves to be an important factor in decision making for the government and the people, and if the GDP is increasing, it means that the country is doing well in terms of economic activities. And the government policies are proving effective at the ground level and the country is going in the right direction.

But if the GDP is slowing down or going into the negative range, then it means that the government needs to work on its policies to help bring the economy back on track, and apart from the government, businessmen, Stock market investors and individual policymakers use GDP data to make informed decisions.

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When our country’s economy performs well, businessmen invest more money and increase production because they are optimistic about the future, but when the GDP numbers are weak, everyone starts saving money. And people spend less money and start investing less, and this makes economic growth even more sluggish.

In such a situation, the government is expected to spend more money, the government gives more money to businesses and people through different schemes so that they spend money in return and in this way economic growth can be promoted, similarly, Policymakers use GDP data from the economy to formulate policies to help our country. It is used as a yardstick for making future plans.

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