How to calculate real gdp

For economists, investors and anyone involved in finances, the Gross Domestic Product (or GDP) of a country is very important to know and understand.

What is Gross Domestic Product?

The Gross Domestic Product (otherwise known as the GDP) of a country is an engrossing monetary value (stated in the country’s own currency) of all goods and services produced by a country within a defined time period.

How is it calculated?

GDP can be calculated using two formulae;

• The Expenditure Approach involves the following formula:

Where:

C is consumption (which includes all private spending done on all kinds of goods and services)

G is government spending (which includes employee salaries, government funded construction, public schooling and military related spending)

I is investments made by the country

NX is the country’s net exports

• The Income Approach involves the following formula:

GDP = Total National Income + Sales Tax + Depreciation + Net Foreign Factor Income

Where:

The Total National Income includes the total of all wages, profits, int

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