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What is GDP?

Gross Domestic Product (GDP) measures the production of all industries within a country, to get a picture of how the national economy is doing. GDP is one of the most important number to economists, and it is calculated every quarter.

Growth for the current quarter compared to the previous quarter is a good sign. Two consecutive quarters of decline in GDP are an indication of a recession, but it is not the only metric used to make that call.

There are three ways of computing GDP: income, expenditures, and production. Theoretically using any of the three approaches should yield the same number. Once GDP numbers are released, it is common for them to be revised based on updated information.

GDP tracks how much production occurs within a company’s borders, while Gross National Product (GNP) tracks the amount of production for which citizens of a particular country have ownership interest, without regard for where the production takes place.

Keywords: recession, macroeconomics, quarterly review, Gross Domestic Product (GDP), Gross National Product (GNP),