What is gross domestic product (GDP)?

Gross Domestic Product (GDP) is defined as the total value of all goods and services produced within a country's borders over a specific period, typically a year or a quarter. This measurement reflects the economic performance of a nation, capturing the output of various industries and sectors within the economy.

GDP encompasses consumption, investment, government spending, and net exports (exports minus imports). By evaluating these components, GDP provides a comprehensive picture of a country's economic health and is a critical indicator for policymakers, economists, and researchers.

Understanding GDP helps in analyzing growth trends, comparing economic productivity between different countries, and making informed decisions regarding fiscal and monetary policies. It does not measure imported goods, inequality, or total income of residents, making the choice reflecting the total value of goods and services the most accurate definition of GDP.