What Does GDP Mean?

The GDP directly relates to the amount of products and services sold in any given year.

The GDP, or gross domestic product, refers to a value placed on a country's goods and services. It is the single most important measure used in determining inflation and the economic health of a nation.

What is Measured

The GDP uses actual values of products and services sold to create a number that directly reflects the growth or decline of the economy.

How GDP is Calculated

According to Investorwords.com, the GDP is figured by adding the value of everything produced in a country to the value of exports, and then subtracting the value of imports.

How GDP is Expressed

GDP is usually written as a percentage up or down from the quarter or year preceding the one measured, as explained by Forbes' Investopedia.

What is Affected

The GDP reflects what has already occurred; however the GDP report will affect future stock market and interest rates, further impacting the nation's economy.

Alternative Measurements

There are two similar economic measurements, the GDP(I) and the GNP. The GDP(I) is a similar measurement using income rather than sales. The GNP includes only the goods produced by U.S. firms, no matter where they are produced.

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