What Is GDP? | Business Networking Link

GDP, or Gross Domestic Product is a way of measuring the present state of the economy in a single number.

GDP can be measured via output, expenditure and income.

As the BBC?s Business Website explains, Output measure refers to the value of all the goods and services produced in total by the economy. Sectors include agriculture, manufacturing, energy, construction, services and the government.

Expenditure measure is the value of goods and services purchased by households and the government. It also includes investment in machinery and buildings, together with the value of exports less imports.

Finally, Income measure take into account the value of income generated mostly in terms of profits and wages.

One single measure of GDP is published in the UK by the Office for National Statistics.

Producing the figures is a huge undertaking. Surveys are conducted involving thousands of UK firms, in sectors ranging from manufacturing, services, retailing and construction. Government departmental data covering various activities is also collected.

Early results provide the government?s policymakers with an estimate of real growth in economic activity.

The figure of GDP is revised as more information becomes available.

The Bank of England use the GDP as a means of determining the health of the UK economy and as an indicator in setting interest rates, adjusting these up or down in accordance with rising prices and economic growth levels.

As regards the Government, the Treasury plans economic policy using GDP. Tax receipts fall when the economy contracts, so the GDP figures inform how the government adjust spending and tax plans as a result.

GDP is used by the European Union, establishing different countries? contributions to the EU budget.

The vital work of the Office for National Statistics in compiling the GDP figure has wide ranging implications for the UK and beyond.

Source: http://www.businessnetworkinglink.com/2012/12/what-is-gdp/

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