Gross Domestic Product (GDP)
Gross Domestic Product (GDP) is the market value of all finished goods and services produced within a country in a year. A finished good or service is one that will not be sold again as part of some other good. This may be explained with an example.
When a bakery buys flour, eggs and butter to make cakes or bread, these sales cannot be counted in GDP because these goods are not finished. They are intermediate goods that, when combined, will become a finished good.
But, if a consumer buys egg to make an omelet, the egg is a finished good because it won’t be sold again as part of some other good. GDP only counts production. If an old house is sold this year, that does not add to GDP since the house was not produced this year.
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GDP also only counts goods and services produced within a country. If we buy onion from India, that adds to Indian GDP, not to Bangladesh GDP. On the other hand, medicine produced in Bangladesh and exported to Africa adds to Bangladesh GDP.
If a good is not bought and sold in a market, then it’s not typically counted in GDP because without market prices, there is no easy or agreed way to calculate how much a good worth. Ultimately, GDP is just a number and is usually measured annually.