Gross domestic product
Gross domestic product measures the value of production within an economy over a period, using national-accounts rules that avoid counting intermediate production repeatedly. Nominal GDP uses current prices; real GDP adjusts for estimated price changes to compare output volumes. GDP is domestic, not a measure of all income received by residents from anywhere. It also does not, by itself, describe how income is distributed or capture every aspect of wellbeing.
Worked example
A furniture producer sells a finished table for $500 after buying timber for $200. Counting the finished output and separately adding the full timber sale would double-count that input; a value-added approach recognises each producer’s contribution.
Common mistake
Do not confuse GDP with government revenue, company sales totals or national income from resident ownership. Distinguish real and nominal measures before interpreting growth.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | BT | Supporting | September 2026–June 2027 |
| FIA | FBT | Supporting | September 2026–June 2027 |