what is gross domestic product gdp 
gross domestic product gdp is the total monetary or market value of all the finished goods and services produced within a country s borders in a specific time period as a broad measure of overall domestic production it functions as a comprehensive scorecard of a given country s economic health though gdp is typically calculated on an annual basis it is sometimes calculated on a quarterly basis as well in the u s for example the government releases an annualized gdp estimate for each fiscal quarter and also for the calendar year the individual data sets included in this report are given in real terms so the data is adjusted for price changes and is therefore net of inflation investopedia zoe hansenunderstanding gross domestic product gdp the calculation of a country s gdp encompasses all private and public consumption government outlays investments additions to private inventories paid in construction costs and the foreign balance of trade exports are added to the value and imports are subtracted 1of all the components that make up a country s gdp the foreign balance of trade is especially important the gdp of a country tends to increase when the total value of goods and services that domestic producers sell to foreign countries exceeds the total value of foreign goods and services that domestic consumers buy when this situation occurs a country is said to have a trade surplus if the opposite situation occurs that is if the amount that domestic consumers spend on foreign products is greater than the total sum of what domestic producers are able to sell to foreign consumers it is called a trade deficit in this situation the gdp of a country tends to decrease gdp can be computed on a nominal basis or a real basis the latter accounting for inflation overall real gdp is a better method for expressing long term national economic performance since it uses constant dollars 2let s say one country had a nominal gdp of 100 billion in 2012 by 2022 its nominal gdp grew to 150 billion prices also rose by 100 over the same period in this example if you looked solely at its nominal gdp the country s economy appears to be performing well however the real gdp expressed in 2012 dollars would only be 75 billion revealing that an overall decline in real economic performance actually occurred during this time 