1. GDP measures the monetary value of final goods and services—that is, those that are bought by the final user—produced in a country in a given period of time (say a quarter or a year).
2. It counts all of the output generated within the borders of a country.
3. An alternative concept, gross national product, or GNP, counts all the output of the residents of a country. So if a German-owned company has a factory in the United States, the output of this factory would be included in the U.S. GDP, but also in German GNP.
4. GDP can be calculated in three ways, using expenditures, production, or incomes and it can be adjusted for inflation.
5. Real GDP takes into account the effects of inflation while nominal GDP does not (More on this later).
Case Study: Composition of GDP: Expenditure Side (2011-12 prices)
