GDP

A region of the gross domestic product or GDP, is one way to measure the size of its economy. The GDP of a country is defined as the total market value of all goods and services produced in a country during a given period (usually a year). It is also considered as the sum of value added at each stage of production (the intermediate stages) of all goods and services produced within a country in a given period of time.

The most common approach for measuring and understanding GDP is the method of expenditure:

GDP = consumption investment + + (public spending) + (exports - imports), or GDP = C + I + G + (XM) "Gross" refers to the depreciation of the capital stock is not included. With depreciation, investment net instead of gross investment is net domestic product. Consumption and investment in this equation are spending on final goods and services. The exports minus imports part of the equation (often called cumulative exports), and then subtracting this rule on the part of this expenditure was not produced at the national level (imports), and adding to the national territory (exports). Economists (since Keynes) have preferred to split the term of the general consumption in both parties, private consumption, and the public sector (government) expenditure.

Two advantages of dividing the total consumption of this theory in macroeconomics are:

Private consumption is a central concern of economic well-being. The Private investment and trade parts of the economy are headed ultimately (in the economic models) to the increase in long-term private consumption.

If endogenous separated from private consumption, public government can be treated as exogenous, so that the different levels of government expenditure can be considered within a macroeconomic framework.

GDP vs GNP

GDP can be compared with the GNP, or gross national product, which the United States used in the compilation of national accounts until 1992. The two terms of GDP and GNP are almost identical - and yet quite different; GDP (or GDI - Gross Domestic Income) regardless of the region where the income is generated. That is, what is the market value of all messages produced in a country, the United States, for example, in one year. GDP is concerned that the output was produced, not that submitted it. Meanwhile, the GNP (or GNI - Gross National Income) is a measure of the method of income or the value of output produced by the "nationals" of a region. GNP is concerned that "owns" the production. If we take the United States as an example again, the GNP measures the value of output produced by American companies, regardless of where the companies are located. This compares to GDP, which is responsible for the production, takes place, not whether the company is an American company or not (assuming that a company can be defined as America in a world Economic where most of the world are in fact groups).