Gross Domestic Product (GDP)

Gross Domestic Product (GDP)

Gross Domestic Product (GDP) Definition

The gross domestic product is the value of goods and services produced in a national economy usually over a year, but can be any period of time.

Gross Domestic Product (GDP) Explained

The GDP, defined is the primary indicator of a country’s economy over time. Gross domestic product history can tell a lot about the ups and downs of a country’s economy. The GDP normally includes private and government sectors as well as foreign businesses that operate within the confines of the nations border. However, the GDP does not include the overseas operations of the nation’s local businesses. One thing that does include the overseas operations is the gross national product or GNP. There is also a nominal GDP as well as a real GDP. These are GDP measurements that account or do not account for inflation. The nominal GDP does not account for inflation and is known as the current dollar rating for GDP. The real GDP does account for inflation and gives us a true and reliable number for GDP.

Gross Domestic Product (GDP) Formula

The gross domestic product formula is as follows:

GDP = Consumption + Gross Investments + Government Spending + (Exports – Imports)

Gross Domestic Product (GDP) Example

Ted is a employee for the government of Brechenstein, and he is currently trying to find the gross domestic product for his nation. He begins gathering information where he can and finds several facts needed to calculate the GDP. He found the private consumption to be $2 billion for the nation. Gross investments were found to be $10 billion, and the government spending was at a record level of $15 billion. The total amount of exports exceeded the imports by $1 billion. Thus using the formula above the total GDP for Brechenstein was found to be $28 billion.


Is it time to hire a CFO? Click to learn the 4 reasons why it may be time to hire a CFO.

gross domestic product

 

Strategic CFO Lab Member Extra

Access your Recruiting Manual Execution Plan in SCFO Lab. The step-by-step plan recruit the best talent as well as avoid hiring duds.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Lab join SCFO Lab for JUST $1!

gross domestic product

See Also:
Consumer Price Index (CPI)
What is Inflation?
What is Deflation?
Currency Exchange Rates
Economic Indicator

ARTICLES YOU MIGHT LIKE

The Struggles of Private Company Accounting

Hiring the right accountant  When I meet a business owner operating at a successful $10 million in revenue, they often mention, “My CPA”… I immediately know that CEO/Entrepreneur is referring to their Tax CPA.  That is because one thing that all Entrepreneurs have in common is that they must file a tax return.  So, from

Read More »

IN CRISIS? GET A STRATEGIC CFO! – CEO Blindspots Podcast

Friend of the firm, Birgit Kamps, recently had Strategic CFO President, Dan Corredor, as a guest on her podcast, CEO Blindspots. CEO BLINDSPOTS HOST: Birgit Kamps. She was speaking five languages by the age of 10, and lived in five countries with her Dutch parents prior to becoming an American citizen. Birgit’s professional experience includes starting

Read More »

SHRM calls ICHRA the 401K for Group Health Benefits

Fed-up with group health insurance? ICHRA is the new way to offer great health benefits and avoid ACA penalties, SHRM calls it the 401K for group health benefits.  In 2020 the Department of Labor, HHS and IRS changed the rules for employer health benefits. They changed the Affordable Care Act mandates and penalties for every

Read More »

JOIN OUR NEXT SERIES

Financial Leadership Workshop

MARCH 28TH-31ST 2022

SHARE THIS ARTICLE

JOIN THE NEXT STRATEGIC CFO™ SERIES

Strategic CFO™ Financial Leadership Workshop
The Art of the CFO®

Days
Hours
Min
Sec

September 12-15th 2022