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Gross Domestic Product – GDP

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Gross Domestic Product (GDP) : is the total value of goods and services produced in a country during a specific period of time. It is one of the most comprehensive economic statistics and must be closely monitored because it is used to measure the overall size and health of the economy. GDP tells us whether the economy is growing by producing more goods and services or shrinking due to a decrease in production. It also shows us how an economy works compared to other countries in the world. GDP for a country takes into account all public and private spending, general and specific production, including government spending, business and consumer consumption, investment, and net exports (calculated as total exports minus total imports). GDP is typically calculated annually, but it can refer to any period. GDP is usually released every three months and can have a significant impact on financial markets.

Why is Gross Domestic Product important? Gross Domestic Product is an important measure of a country’s economic growth, health, and size, and it also affects financial market trends. The pace of economic growth affects employment conditions and investment decisions, as well as the ability of workers to find jobs. When GDP increases, it is generally assumed that the economy is functioning well. Employment is expected to rise as companies hire more workers, meaning people have more money to spend. This generates more business and maintains the cycle. When GDP contracts, the opposite occurs: companies reduce production and expansion, and workers are laid off. When GDP does not grow quickly enough, companies have no incentive to expand and hire more workers, leading to a cycle of recession or decline. Policymakers take into account Gross Domestic Product when making decisions on interest rates, taxes, and trade policy. By monitoring trends in the overall growth rate, unemployment rate, and inflation rate, policymakers can assess whether the current monetary policy aligns with this fundamental goal.

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