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Full-Form of GDP:
GDP Full-Form refers to the Gross Domestic Product. GDP is a way of measuring the economy of a country. It includes the monetary value of all commodities and services that are produced within the borders of the country in a specific period of time. The GDP of a country not only indicates the economic health of that country but also help in gauging the living standards of that nation. Since the mode used for measuring the gross domestic product is same in each nation, this factor can be utilized for comparing the productivity of a number of nations with high accuracy.
The GDP of the current year can be seamlessly compared to that of the previous year due to the adjustment made for inflation every year. This measurement method can help in getting an idea about the economic decline or growth of a country. Even though GDP can measure the living standards, it does not take into consideration many factors that influence the living standards. For example, GDP does not consider the non-market transactions, like unpaid or volunteer services, and household productions.
It also understates the true growth of the economy by not adjusting fully for the new products and quality improvements. For example, the treatment given by the GDP to the present generation computers is the same as that given to the computers of the past generations, even though the ones from the present generation are more powerful and less expensive. The only factor that the gross domestic product considers is the monetary value.
The formula for Calculating GDP:
GDP = I+G+C+NX
Here, ‘I’ is equal to the sum of all investments of a country, `G’ is the total amount of money spent by the government, ‘C’ is equal to the number of consumers spending or the private consumption in the economy of a nation and ‘NX’ stands for the total net export of the nation. NX is equal to the difference between the total exports and imports.