WHAT IS GDP
Gross domestic product is the total value of everything produced in the country. It doesn't matter if it's produced by citizens or foreigners. If they are located within the country's boundaries, their production is included in GDP.
(GDP) is one of the most common indicators used to track the health of a nation's economy.Why GDP is an important economical factor, and what it means for economist and investors.
GDP has following key factors :
- It represents the value of all goods and services produced in specific time period inside country borders.
- Economists can use GDP to tell that whether economy is growing or falling .
- Investors can use GDP to make decision of investing .
- a bad economy means lower earning and lower stock prices.
How they calculate GDP:
The components of GDP include personal consumption expenditures plus business investment plus government spending plus (difference between export and imports ). Now that you know what the components are, it's easy to calculate a country's gross domestic product using this standard formula: C + I + G + (X - M).
HOW GDP AFFECTS YOU:
GDP impacts personal finance, investments, and job growth.Investors look at nations growth rate to decide whether to invest there or not.They also compare country growth rates to find their best international opportunities.They purchase shares of the companies of the rapidly growing countries.
So GDP means a lot for a nation as if investors will not invest than the stock prices will experience downfall which may led to weaken the financial conditions of the nation.
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