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This post is about GDP & what is GDP. Gross domestic product is the full form of it. This post provides detailed information about it and how the GDP of a country is calculated.

What Is GDP 

GDP | What Is GDP & How is It Calculated

  • It means expenses or circulation.
  • It means to spend money or to circulate money.

In any fixed time, such as if the product and service produced in any country or economic system in 1 year is mixed and its price is fixed according to the market, it is called the GDP  of that country’s economy (It means that all the production that has taken place in that country in 1 year).

It depends on four factors first consumer, second industry, third government expenditure and fourth import and export results


The first factor is consumer if the consumer spends more, the more GDP will get growth. The consumer & industry contributes over 80% of GDP. If you are a consumer and you have a note of ₹ 100 which you spent it and within 3 months this note travels to 100 different people, then this note gave a contribution of ₹ 10000 in GDP.

The second factor is Industry. How much does the industry spend If the industry stops spending, then the GDP will be decreased and if the industry increases the investment and starts giving more wages to the workers then the GDP increases.

The Third factor is government spending, the more the government spends, the more our GDP will increase, so the government should spend more and pay more and more money to people and invest in new projects. In order to spend more money, the government should also have so much money. Government spending contributes less than 15% to it.

The fourth factor is import and export. The resultant of imports and exports is counted within it. Import & exports contribute less than 5%.

You must have understood that industry and consumers are the biggest factors in it’s growth, if Indian people spend more money then it will increase significantly. You can see that during the coronavirus lockdown people stopped spending money due to which the GDP fell down considerably.

Only domestic goods are counted in it. The thing which is made in our country is added to it. for eg: if something is made in India and sold in India or in any other country, it is added to it. And if something is made in another country and sold in India, it will not be added to GDP. GDP is first seen to know the strength of any country’s economy.

Also Read:-How To Join DRDO

How does GDP grow

GDP | What Is GDP & How is It Calculated

For example, if you live in India and buy things made in India, then India’s GDP will increase, but if you live in India and buy things from another country, then that country’s GDP will increase.

How GDP is Calculated?

To understand this, I am trying to explain it with an example. for eg: 100 tables are made in a country and the cost of each table is ₹ 200, then the GDP of that country will be ₹ 20000.


GDP= C+I+G+(X-M)

where c= consumer expenditure

I= Industry Investment
G= Government Expenditure
X-M= Exports-Imports (where(-) indicate subtraction)

It is calculated because it describes the economic condition of any country. It is usually calculated for 1 year. The GDP of different countries is compared to the number that comes after calculating it. This shows how our economic situation is compared to other countries.

Also Read:-How To Join DRDO

I hope that you have got a lot of good information from this post and if you liked this post then do not forget to share it and if you have any questions related to it, then do not forget to comment.




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