Write the meaning of Gross Domestic Product (GDP). Explain its features. |
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| Ans : It is the market value of all final goods and services produced within the boundary of a country during a year, by resident or non-resident.
Symbolically,
GDP=P₁.Q₁+P₂.Q₂+……….Pn.Qn
Where,
P = Market price of goods and services
Q = Quantity of goods and services
GDP include final goods and services. All the intermediate goods and services are excluded from the measurement of GDP. Final goods and services are those goods which are produced for final use. Intermediate goods are those goods which are produced by one firm and used in further processing by other firms. For example, flour is an intermediate goods because it is used to produce bread. Bread is final product as it is used for final consumption.
# Features of GDP
a) GDP is the money value of all final goods and services produced within a country.
b) It includes money value of only final goods and services.
c) The money value of goods and services is calculated at the current market price.
d) GDP includes only those goods which have market value and brought in the market for sell.
e) Transfer payment like pension, unemployment allowance etc. are not included in GDP because these payments does not contribute in the production.
f) It includes the production that takes place within the geographical boundary of a country.
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