GDP is an economic measure of a country’s overall productive output. It is an internationally recognized indicator of economic progress. It is the broadest and most widely used measure of economic activity. It is also known as Purchasing Power Parity (PPP) GDP because it adjusts for differences in the price of goods and services across countries, allowing for direct comparisons between economies.

Economists use the growth rate of GDP to assess a nation’s economic health, understand the causes of business cycles and predict future growth. Governments and central banks closely monitor GDP to make decisions about spending, tax rates, interest rates, and money supply.

The calculation of GDP is based on data collected and compiled by national statistical agencies. These agencies rely on publicly available information to make their estimates.

GDP includes all market sales of products and services, plus government consumption and investment expenditures, and net exports. The measure also excludes depreciation of fabricated assets, and the destruction and degradation of natural resources. It does not include unpaid work performed by volunteers and households, black-market activities, or the value of leisure time.

The calculation of GDP can be done in three ways: the production approach, the expenditure approach, and the purchasing power parity (PPP) approach. The PPP method accounts for price distortions by converting GDP into international dollars using purchasing power parity rates. It is also less sensitive to fluctuations in prices than the other two approaches because it does not include indirect measurement of consumption and investment.