It includes all final goods and services—that is, those that are produced by the economic agents located in that country regardless of their ownership and that are not resold in any form. It is used throughout the world as the main measure of output and economic activity. In economics , the final users of goods and services are divided into three main groups: One way gross domestic product GDP is calculated—known as the expenditure approach—is by adding the expenditures made by those three groups of users.
Accordingly, GDP is defined by the following formula: The expenditure approach is so called because all three variables on the right-hand side of the equation denote expenditures by different groups in the economy. The idea behind the expenditure approach is that the output that is produced in an economy has to be consumed by final users, which are either households, businesses, or the government.
Therefore, the sum of all the expenditures by these different groups should equal total output—i. Each country prepares and publishes its own GDP data regularly.
When an economy experiences several consecutive quarters of positive GDP growth, it is considered to be in an expansion also called economic boom. Conversely, when it experiences two or more consecutive quarters of negative GDP growth, the economy is generally considered to be in a recession also called economic bust.
In the United States, the Business Cycle Dating Committee of the National Bureau of Economic Research is the authority that announces and keeps track of official expansions and recessions, also known as the business cycle.
A separate field within economics called the economics of growth see economics: Growth and development specializes in the study of the characteristics and causes of business cycles and long-term growth patterns. Growth economists doing research in that field try to develop models that explain the fluctuations in economic activity, as measured primarily by changes in GDP.
A country with a higher level of GDP per capita is considered to be better off in economic terms than a country with a lower level. Articles from Britannica encyclopedias for elementary and high school students. It is the total value of the goods and services produced in a country during a specific period of time, usually a year. GDP is used throughout the world as the main measure of output and economic activity.
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