EconomicsBeginner
GDP
Gross Domestic Product
The total value of all goods and services produced in a country in a period.
Detailed explanation
Nominal GDP is measured at current prices; real GDP strips out inflation and is the figure used to describe growth. Two consecutive quarters of contraction is the common working definition of a recession.
Formula
GDP = Consumption + Investment + Government spending + (Exports − Imports)
Example
Real GDP rising from ₹160 lakh crore to ₹171.2 lakh crore is 7% growth.
Why it matters
Corporate earnings grow out of nominal GDP over the long run, which anchors realistic equity return expectations.
Key points
- Real GDP is inflation-adjusted; nominal is not.
- Per-capita GDP is the better measure of living standards.
- It counts output, not distribution or wellbeing.
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Educational content only. Definitions and examples are illustrative and are not investment, tax or legal advice.