GDP (Gross Domestic Product) : Definition and equation

GDP = C + G + I + NX

C = Consumption :
  • Durable goods (last more than three years as cars, furniture, TV)
  • Nondurable goods (as food, clothing, fuel)
  • Services (as restaurant expenditure)
G = Government Spending (Government Expenditure) :
  • Pensions
  • Health Care
  • Education
  • Defense
  • Welfare
  • Roads
I = Investment :
  • Non-residential fixed investment (as new factories)
  • Residential investment (as new houses, condominiums, apartment buildings)
  • Business inventories (goods produced but not yet sold)
NX = Net Exports (The balance of trade) :
  • Exports
  • Imports
GDP of Major Countries in the World: Brazil, China, Germany, India, Japan, Russian Federation and United States.
Data from World Bank ©2012 Google
Tags: ,


Our mission is to stimulate creativity and help people learn in a very simple, clear, easy to understand way. You can find us on Facebook , Twitter , YouTube and Google+ .


Leave a Reply