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    GDP Formula — Measuring Economic Output

    Gross Domestic Product (GDP) measures the total value of all goods and services produced within a country in a given period. It's the primary indicator of economic health.

    GDP (Expenditure Approach)

    GDP = C + I + G + (X - M)

    Where:

    • C = Consumer spending (household expenditure)
    • I = Investment (business spending on capital goods)
    • G = Government spending
    • X = Exports
    • M = Imports

    Step-by-Step:

    1. 1

      Measure consumption

      All household spending on goods and services.

    2. 2

      Add investment

      Business spending on machinery, construction, inventory.

    3. 3

      Add government spending

      Government purchases of goods and services (not transfers).

    4. 4

      Add net exports

      Exports minus Imports.

    Worked Examples:

    Simplified economy

    C: ₹60L CrI: ₹25L CrG: ₹15L CrX-M: -₹5L Cr

    Result: GDP = ₹95L Cr

    60 + 25 + 15 + (-5) = ₹95 lakh crore GDP

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