Definition GDP

Gross Domestic Product, The total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports. It is important to differentiate Gross Domestic Product from Gross National Product (GNP). GDP includes only goods and services produced within the geographic boundaries of the Pakistan, regardless of the producer's nationality. GNP doesn't include goods and services produced by foreign producers, but do include goods and services produced by Pakistan firms operating in foreign countries.

GDP can be thought of as CIGXM.

C: Consumption - private spending by consumers I: Investment - includes equipment, inventory, and new homes G: Government spending - does not include transfer payments X: Exports - goods or services that an entity chooses to produce for another entity M: Imports - goods and services from another entity (this combined with the X term is sometimes referred to as "net exports"). Transfer payments: social security, welfare, stocks, bonds, and any other transfer of funds in which nothing is produced Using this method, the equation for GDP is GDP=C+I+G+(X-M).