GDP
Gross Domestic Product (GDP) is the value of the all final goods and services produced within the
boundary of a nation during one year. For India, this calendar year is from 1st April to 31st March.
It will be better to understand the terms used in the concept, ‘gross’ means same thing to Economics
and Commerce as ‘total’ means to Mathematics; ‘domestic’ means all the economic activities done
inside the boundary of the nation/country and by its own capital; ‘product’ is word to define ‘goods
and services’ together; and ‘final’ means the stage of a product after which there is no known chance
of value addition in it.].
The different uses of the concept GDP are as given below:
(i) Per annum percentage change in it is the ‘growth rate’ of an economy. For example, if a
country has a GDP of Rs. 107 which is 7 rupees higher than the last year, it has a growth rate
of 7 per cent. When we use the term ‘a growing’ economy, it means that the economy is adding
up its income i.e. in quantitative terms.
(ii) It is a ‘quantitative’ concept and its volume/size indicates the ‘internal’ strength of the
economy. But it does not say anything about the ‘qualitative’ aspects of the produced goods
and services by the economy.
(iii) It is used by the IMF/WB in the comaparative analyses of its member nations.
Gross Domestic Product (GDP) is the value of the all final goods and services produced within the
boundary of a nation during one year. For India, this calendar year is from 1st April to 31st March.
It will be better to understand the terms used in the concept, ‘gross’ means same thing to Economics
and Commerce as ‘total’ means to Mathematics; ‘domestic’ means all the economic activities done
inside the boundary of the nation/country and by its own capital; ‘product’ is word to define ‘goods
and services’ together; and ‘final’ means the stage of a product after which there is no known chance
of value addition in it.].
The different uses of the concept GDP are as given below:
(i) Per annum percentage change in it is the ‘growth rate’ of an economy. For example, if a
country has a GDP of Rs. 107 which is 7 rupees higher than the last year, it has a growth rate
of 7 per cent. When we use the term ‘a growing’ economy, it means that the economy is adding
up its income i.e. in quantitative terms.
(ii) It is a ‘quantitative’ concept and its volume/size indicates the ‘internal’ strength of the
economy. But it does not say anything about the ‘qualitative’ aspects of the produced goods
and services by the economy.
(iii) It is used by the IMF/WB in the comaparative analyses of its member nations.
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