The gross domestic product (GDP) of a nation is an estimate of the total value of all the goods and services it produces during a specific period, usually a quarter or a year. Its greatest use is as a point of comparison: Did the nation's economy grow or contract compared to the previous period measured? There are two main ways to measure GDP: by measuring spending or by measuring income. And then there's real GDP, which is an adjustment that removes the effects of inflation so that the economy's growth or contraction can be seen clearly.Key TakeawaysGDP can be calculated by adding up all of the money spent by consumers, businesses, and the government in a given period.It may also be calculated by adding up all of the money received by all the participants in the economy.In either case, the number is an estimate of "nominal GDP."Once adjusted to remove any effects due to inflation, "real GDP" is revealed. Calculating GDP Based on Spending One way of arriving at GDP is to count up all o...
