Gross Domestic Product (GDP)

A country’s gross domestic product measures its economic output over a given period. It is calculated by adding the total value of goods and services, household and government spending, investments, and net exports. There are different ways to measure GDP. The UK, for example, calculates GDP from Output or Production – GDP(O) – the sum of the value added through the production of goods and services within the economy, according to the Office for National Statistics. GDP(O) can be used to show how much different industries contribute to overall output. GDP from Income – GDP(I) – measures the total income generated by the production of goods and services within the economy. GDP(I) breaks this income down into income earned by companies, employees and the self-employed. Finally, GDP from Expenditure – GDP(E) – measures total expenditure on all finished goods and services produced within the economy. These three measures should all sum to the same total.