Final answer:
Gross Domestic Product (GDP) is the total monetary value of all goods and services produced within a country. It is measured by summing up the income of all individuals or the value of all goods and services produced in the country. GDP is important for comparing economic performance and health between countries.
Step-by-step explanation:
Gross Domestic Product (GDP) is the total monetary value of all goods and services produced within a country during a specific time period. It is calculated by summing up the income of all individuals or the value of all goods and services produced in the country, including government spending. GDP is an important measure of a country's productivity and economic performance, and it allows for comparisons between different countries. For example, comparing GDP rates can help determine the economic health of a country relative to others.
GDP can be measured by looking at what a country produces. This includes five categories: durable goods (such as cars and appliances), nondurable goods (such as food and clothing), services (such as healthcare and banking), structures (such as buildings and infrastructure), and changes in inventories. The total GDP measured by what is produced is the same as the GDP measured by looking at the five components of demand.
It is important to note that GDP only measures the final goods and services produced in a country to avoid double counting. For example, if a tire manufacturer produces tires and an automaker sells a new truck containing those tires, the value of the tires is only counted once in the GDP calculation. Double counting is avoided to ensure accuracy in measuring the overall value of goods and services produced.