What is the full form of GDP:

GDP represents Gross Domestic Product.

It is the system which helps in measuring the size of the economy of the country. It tells about the economic performance of all the units or entities which are involved in production. It also measures the contribution of industrial sector in the development of the country. GDP does not measure the sales of the company but it measures the value added. Value added can be understood as the output value minus the value of goods which are used in producing it. By calculating the GDP we can understand the growth chart of the country. GDP helps in estimating the economic growth of the country year wise, also it can be calculated from quarter to quarter. The growth pattern of GDP shows the success or failure of the economy of the country. It also tells whether the economy is undergoing recession.

GDP can be calculated in three ways, they are: production approach, expenditure approach or the income approach. The direct method of determining the GDP is the production approach. It takes the summation of all the outputs of all the enterprises and gets the total. The expenditure approach can be opted only when the product is be completely sold out to the customers. If this condition is fulfilled then the value of product should be same as the expenditure done by the customers in buying the product. Last is the income approach in which the income done by the producers should be same as the value of the product. GDP in this approach is calculated by summing up the incomes of all the producers.