GDP full form, definition, types, largest economies in the world.

Factors of GDP?

  •  GDP (Gross domestic Product)
  •  NOMINAL GDP AND REAL GDP
  •  PER CAPITA NOMINAL AND REAL GDP
  •  GDP PPP ( purchasing power parity)

What is GDP? 

Gross domestic product (GDP) is the market value of all final goods (agriculture, manufacturing, etc.) and services produced in the country over a given period, often annually. The rate of increase or decrease over the previous year is called gdp growth rate (%). which is calculated quarterly (4 months), or year wise.

What is GDP, Why GDP is such an important economic factor, and  Why is important for all countries.
Gross Domestic Product


  We have simple formula to express the GDP. 
                                            
   GDP = C + G + NX + I (consumption +  government spending+ (export - import) + investments)


example.

A country produces only 100 kg of wheat in a year, no other products and services produced , if the price of 1 kg of wheat in the market is Rs. 20, the GDP of that year will be (100 × 20) = Rs. 2000.

Nominal GDP and real GDP.

When GDP is evaluated at current domestic prices, it is called nominal GDP. It includes the price of things and the fluctuations of currencies, which makes it different from real gdp. generally Nominal always greater than real GDP because of price and quantity fluctuations and also useful understand inflation.

• Top 10 Nominal GDP countries.

1. United State  21.344 trillion $
2. China  14.216 trillion $
3. Japan  5.176 trillion $
4. Germany 3.963 trillion $
5. India   2.971 trillion $
6. United  Kingdom   2.829 trillion $ 
7. France   2.761 trillion $
8. Italy  2.025 trillion $
9. Brazil  1.960 trillion $
10.Canada 1.739 trillion $

example

If only apple is produced in a country, and the original price of apple is 10 ₹ and 100 apples are produced in first year in country, then its real GDP would be 100 × 10 = 1000 ₹. In second year due to demand, the price will be 12₹ and quantity is also 120. Hence its nominal GDP will be (120×12)=1440₹, while 110 × 10 (base price) = 1100 will be the actual gdp for that year.

• Nominal per capita =  nominal gdp of country/population of country
• Real gdp per Capita  =  Real gdp of country/population of country.

GDP PPP (Gross domestic Product Purchasing Power Parity)-

Purchasing power parity (PPP) is measured by finding the values ​​(in USD) of a basket of consumer goods (eg. fruits, pens, etc.) present in each country. If the cost of that basket is 100$ in the US and  150 $ in India, it means you have to pay 50 $ more for that basket in India.It is used to indicate the price and inflation of products.

example

If you buy a burger in the US for 3 $ and you get the same burger in India for 50 ₹, if 1 $ = 70 ₹ then 3 $ = 210 ₹

According to this-

1 $ in GDP PPP costs in rupees =  50/3 = 16.6 ₹

 As per the International monetary fund report top 5 GDP in purchasing power parity.

1. China - 27.438 trillion USD
2. United States - 21.410 trillion USD
3. India - 11.436 trillion USD
4. Japan - 5.794 trillion USD
5. Germany - 4.558 trillion USD

GDP full form, definition, types, largest economies in the world. GDP full form, definition, types, largest economies in the world. Reviewed by MG on January 08, 2020 Rating: 5

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