GROSS DOMESTIC PRODUCT

PRESENTED BY:
PRAKASH SHARMA
PGDBM+MBA (1ST SEM.)
GDC-IMM, GURGAON
 INTRODUCTION
• The total market value of all final goods and
services produced within a given country in a
given period of time.
• The sum of value added at every stage of
production of all final goods and services
produced within a country in a given period of
time, and it is given a money value.
 MEASURING GDP

GDP= CONSUMPTION + GROSS INVESTMENT +

GOVERNMENT SPENDING + (EXPORTS – IMPORTS)

OR

GDP= C + I + G + (X - M)
 COMPONENTS OF GDP
 C = PRIVATE CONSUMPTION IN THE ECONOMY.
 I = INVESTMENTS BY BUSINESS OR
HOUSEHOLDS IN THE CAPITAL.
 G = SUM OF GOVERNMENT EXPENDITURES ON
FINAL GOODS AND SERVICES.
 X = GROSS EXPORTS.
 M = GROSS IMPORTS.
 GDP INCOME ACCOUNT
GDP(I) = COMPENSATION OF EMPLOYEES
+ GROSS OPERATING SURPLUS
+ GROSS MIXED INCOME + TAXES
LESS SUBSIDIES ON PRODUCTION
AND IMPORTS.
INTEREST RATES

NET INTEREST EXPENSE IS A

TRANSFER PAYMENT IN ALL
SECTORS EXCEPT THE FINANCIAL
SECTOR. NET INTEREST EXPENSES
IN THE FINANCIAL SECTOR IS SEEN
AS PRODUCTION AND VALUE
ADDED AND IS ADDED TO GDP.
CROSS-BORDER COMPARISON

THE LEVEL OF GDP IN DIFFERENT

COUNTRIES MAY BE COMPARED BY
CONVERTING THEIR VALUE IN NATIONAL
CURRENCY BY
 CURRENT CURRENCY EXCHANGE RATE.
 PURCHASING POWER PARITY
EXCHANGE RATE.
LIMITATIONS OF GDP
 WEALTH DISTRIBUTION.
 VOLUNTARY WORK.
 EXTERNALITIES.
 BLACK MARKET.
ALTERNATIVES TO GDP
 GENUINE PROGRESS INDICATOR (GPI).
 HUMAN DEVELOPMENT INDEX (HDI).
 NATIONAL WEALTH.
THANX