What does the abbreviation GDP stand for in economics?

GDP stands for Gross Domestic Product, the market value of final goods and services produced within an economy during a specified period.

“Gross” means the measure counts production before subtracting depreciation of machinery, buildings, and other capital. “Domestic” refers to production inside a country’s borders, regardless of whether the producer is locally or foreign owned. “Product” refers broadly to economic output, including services as well as physical goods.

Economists use GDP to track the size and growth of an economy. Its expenditure formula is commonly written as consumption plus investment plus government spending plus net exports, with net exports meaning exports minus imports. GDP can be reported in nominal terms using current prices or in real terms after adjusting for inflation.

GDP is not the same as national income, GDP per capita, or overall well-being. It does not show how income is distributed and may omit unpaid household work, environmental damage, or quality-of-life factors. Gross National Product, one of the wrong options, instead focuses on income generated by a country’s residents and businesses, including income from abroad.