Final answer:
GDP, or gross domestic product, is a measure of the total economic production in terms of market prices and an indicator of economic activity, but it does not account for every aspect of a nation's overall well-being, such as leisure and inequality.
Step-by-step explanation:
It measures the value of all goods and services produced within the country in a year by taking the quantities of all goods and services produced, multiplying them by their prices, and summing the total. However, it is important to note that GDP is not a measure of a nation's overall well-being.
The explanation for this is that GDP does not account for various non-economic factors that contribute to the quality of life. These include leisure, environmental quality, levels of health and education, activities conducted outside the market such as informal work or volunteer work, changes in inequality of income, increases in variety, advances in technology, and the value society may place on certain types of output.
Therefore, while GDP can be used as a rough indicator of a society's standard of living, it does not reflect all aspects that determine the well-being of individuals.