Bookmark Bookmark

TOPIC OF THE DAY

ECONOMY

Important Concepts-Gross Domestic Product & Gross Value Added

What is GDP?

GDP is the final value of the goods and services produced within the geographic boundaries of a country during a specified period of time, normally a year. GDP growth rate is an important indicator of the economic performance of a country.

How GDP is measured?

It can be measured by three methods, namely,

Output Method: This measures the monetary or market value of all the goods and services produced within the borders of the country. In order to avoid a distorted measure of GDP due to price level changes, GDP at constant prices o real GDP is computed. GDP (as per output method) = Real GDP (GDP at constant prices) – Taxes + Subsidies.

Expenditure Method: This measures the total expenditure incurred by all entities on goods and services within the domestic boundaries of a country. GDP (as per expenditure method) = C + I + G + (X-IM) C: Consumption expenditure, I: Investment expenditure, G: Government spending and (X-IM): Exports minus imports, that is, net exports.

Income Method: It measures the total income earned by the factors of production, that is, labour and capital within the domestic boundaries of a country. GDP (as per income method) = GDP at factor cost + Taxes – Subsidies.

What is Gross Value Added?

It is a measure of total output and income in the economy. It provides the rupee value for the amount of goods and services produced in an economy after deducting the cost of inputs and raw materials that have gone into the production of those goods and services

You might be interested:

THIS DAY IN HISTORY

3 - December – 1884: Dr Rajendra Prasad, first President of India, was born in Jeradei village of Bihar. About Dr Rajendra Prasad He played a significant role in shaping the Indian Constitution ...

2 months ago

PLACES IN NEWS

Suriname It is a country on the northeastern Atlantic coast of South America. It is bordered by the Atlantic Ocean to the north, French Guiana to the east, Guyana to the west and Brazil to the south. ...

2 months ago

TWO-DAY SPECIAL SESSION OF UN GENERAL ASSEMBLY BEGINS

TWO-DAY SPECIAL SESSION OF UN GENERAL ASSEMBLY BEGINS Context A two-day special session of U.N. General Assembly begins. Details The session will focus on the response to COVID-19 and the best path ...

2 months ago

7TH INDIA-SURINAME JOINT COMMISSION MEETING

7TH INDIA-SURINAME JOINT COMMISSION MEETING Context 7th India-Suriname Joint Commission Meeting was held virtually by both the nations. Details The virtual meeting was co-chaired by V Muraleedharan ...

2 months ago

BRITAIN BECOMES FIRST COUNTRY IN WORLD TO APPROVE CORONAVIRUS VACCINE

BRITAIN BECOMES FIRST COUNTRY IN WORLD TO APPROVE CORONAVIRUS VACCINE Context Britain becomes the first country in the world to approve the Pfizer-BioNTech coronavirus vaccine. Details The initial b ...

2 months ago

EXPLAINED: INTERNATIONAL DAY OF PERSONS WITH DISABILITIES

EXPLAINED: INTERNATIONAL DAY OF PERSONS WITH DISABILITIES About International Day of People with Disability History of World Disability Day The United Nations General Assembly in 1976 proclaimed 1981 ...

2 months ago

Provide your feedback on this article: