Gross domestic product measures the total market value of all final goods and services produced within a country's borders in a given period. It is the broadest scorecard of economic activity. Governments, investors, and central banks watch it closely.

GDP can be measured three ways: production, income, and expenditure. In theory, all three give the same number. In practice, they differ slightly. The expenditure approach is most common: consumption plus investment plus government spending plus net exports.

GDP has limits. It counts output, not well-being. A country can have high GDP and terrible pollution, or high GDP and extreme inequality. It misses unpaid work like caregiving and volunteering. It says nothing about whether the goods produced are useful or destructive. Economists use it because it is consistent and comparable, not because it tells the whole story.

Key points

• Nominal vs. real GDP
• Per capita GDP
• Final goods only, not intermediate
• GDP growth rate
• Limitations as a welfare measure