GDP Calculator (Gross Domestic Product) (2024)

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How to calculate GDP?How to calculate nominal GDP and real GDPGDP in the global contextImportance in economics and its limitationsInteresting facts

This is the GDP calculator (Gross Domestic Product), which helps you to calculate the aggregate domestic output produced in a given country in a nominal term.

In the following, you will get familiar with the logic of this calculator, and you will be able to quickly answer the question: "how to calculate nominal GDP?"

We will also explain the difference between real and nominal terms together with an alignment of some related definitions.

If you are interested in learning how GDP relates to other economic indicators, you may check some of the following tools.

  • GDP gap calculator;
  • Okun's law calculator;
  • Phillips curve calculator; and
  • Money supply calculator.

How to calculate GDP?

GDP (Gross Domestic Product) is a prominent economic-political statistical indicator that measures the total economic output of a particular nation. In other words, GDP determines the value of all final goods and services produced within a country in a given period.

However, GDP can also be expressed as an economy's total domestic expenditures on newly produced goods and services and the total income gained from the production of these goods and services.

Therefore, the GDP calculator can be expressed in three different ways leading to an identical value:

  1. Production output: the sum of gross value added by producers
  2. Income approach: the total income generated by the production process
  3. Expenditure approach: the total spending on goods and services

Following the most transparent and conventional way of computation, our GDP calculator is based on the expenditure approach. Accordingly, gross domestic product (GDP) aggregates four components of expenditure: consumption, investment, government purchases, and net exports.

  1. Consumption covers household spending on goods and services, except new housing purchases.

  2. Investment embraces spending on new equipment and structures, including households' purchases of new housing.

  3. Government purchases are spending on goods and services by local, state, and federal governments.

  4. Net exports is the difference between

  • The value of goods and services produced domestically and sold abroad - exports; and

  • The value of goods and services produced abroad and sold domestically - imports.

    Therefore, net exports = exports - imports.

How to calculate nominal GDP and real GDP

The above-stated summation answers how to calculate nominal GDP, which is evaluated at current market prices. In contrast, real GDP is an inflation-adjusted measure that indicates the value in base-year prices. Unlike nominal GDP, real GDP is corrected by the changes in price level; therefore, it provides a more accurate measure of economic growth. The relation of the nominal and real GDP leads us to the term GDP deflator, which measures the price level of all new, domestically produced final goods and services in an economy.

GDP in the global context

In general, GDP is measured and announced by national government statistical agencies on a quarterly basis (except for the few countries in the world that compile a monthly GDP index, for example, Finland). Thus, GDP provides a basic ground for regular international comparisons of national economic development.

In 2017, according to the International Monetary Fund (IMF), the US GDP ($19.391 billion) reached the world's highest nominal value, followed by China's GDP of $12.015 billion US. Countries in the European Union, in total, achieved $17.278 billion US. The three economies' nominal GDP altogether accounts for more than 60 percent of the world GDP ($79.865 billion US).

Importance in economics and its limitations

Gross domestic product (GDP) is a traditional way to measure economic welfare since individuals have a preference for higher incomes over lower incomes.

However, nominal GDP cannot always demonstrate a precise view of an economy since it does not account for the alteration in price levels and the country's population and omits the dynamic dimension. For these reasons, the following measures were developed which provide a more complete view of economic development:

  • Real GDP: an inflation-adjusted measure that indicates the value in base-year prices. It can also be referred to as "constant-price", "inflation-corrected" GDP, or "constant dollar GDP." See our [real GDP calculator] to learn more. (calc:5081)
  • GDP per capita: a measure of a country's gross domestic product per person.
  • GDP growth rate: in other words, economic growth rate, measures the increase in the inflation-adjusted market value of the goods and services produced by an economy over time. It is conventionally measured as the percent rate of increase in the real gross domestic product, or real GDP.

However, it has weaknesses, as GDP disregards the value of the immaterial aspects of social welfare, such as the value of leisure time and the value of a clean environment. Furthermore, GDP does not account for income distribution among the country's population. Thus it is not used for measuring income and wealth inequalities.

Still, the strong correlation between Gross Domestic Product and various measures of the quality of life suggests that higher GDP promotes a higher standard of living.

Interesting facts

  • Before 1991, the official economic indicator in the United States (as in most other countries) was the Gross National Product (GNP) which is the total value of the national output produced by a country's residents regardless of the place of production. The measure is firmly connected to the concept of GDP. The vital difference is that the country's border delineates GDP, but the citizens' activities define GNP.

  • William Petty is regarded as the first person to contemplate calculating national income, the predecessor of national production. In his article, published in 1691, he calculated the United Kingdom's national income by estimating consumption using an expected figure for daily per capita expenditure and from an estimated population (Lepenies, 2016).

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GDP Calculator (Gross Domestic Product) (2024)


How do you calculate gross domestic product GDP? ›

Accordingly, GDP is defined by the following formula: GDP = Consumption + Investment + Government Spending + Net Exports or more succinctly as GDP = C + I + G + NX where consumption (C) represents private-consumption expenditures by households and nonprofit organizations, investment (I) refers to business expenditures ...

How to calculate the real GDP? ›

It is expressed in base-year prices and is often referred to as constant-price, inflation-corrected, or constant-dollar GDP. Real GDP makes comparing GDP more meaningful because it shows comparisons for both the quantity and value of goods and services. Real GDP is calculated by dividing nominal GDP by a GDP deflator.

What is total GDP gross domestic product? ›

Measuring GDP. 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). It counts all of the output generated within the borders of a country.

How to calculate GDP gross domestic product on the basis of above? ›

What is the GDP Formula?
  1. GDP = C + G + I + NX.
  2. C = consumption or all private consumer spending within a country's economy, including, durable goods, non-durable goods, and services.

Which method is used to calculate Gross Domestic Product? ›

Expenditure Method

We estimate: Consumer spending by individuals Personal Consumption Expenditure) plus Net Expenditure by Central and Local Government. plus all Capital Spending (such as buildings and machines)

What are examples of GDP Gross Domestic Product? ›

GDP = the total market value of the final goods and services produced within the United States in a year. A good is a video game, a car, an apple, a gold ring. Goods are things that people make, grow or extract from the land. A service is a haircut, a bus ride, computer repair, a doctor's care.

How to calculate GDP growth rate? ›

To calculate the growth rate for both nominal and real GDP, two data years are needed. The GDP of year 2 is divided by the GDP of year 1 and the answer is subtracted by one. That is, Growth Rate = (GDP_Year2/ GDP_Year 1) - 1.

What is the nominal GDP formula? ›

What is the nominal GDP formula? The nominal GDP formula: GDP = C + I + G + (X-M), where C is consumption or money spent by people, I is investments, G is government spending, and (X_M) is export-import net proceeds.

What is the formula for calculating real GDP per capita? ›

Real GDP per capita is calculated by dividing GDP at constant prices by the population of a country or area.

What is the real GDP of the Gross Domestic Product? ›

Real gross domestic product is the inflation adjusted value of the goods and services produced by labor and property located in the United States.For more information see the Guide to the National Income and Product Accounts of the United States (NIPA).

Where can I find GDP data? ›

Gross Domestic Product data can be found in the National Accounts dataset portal, and in the Data Tables tab of the International Financial Statistics dataset portal.

What is the gross domestic income GDP? ›

Gross domestic income (GDI) and gross domestic product (GDP) are two slightly different measures of a nation's economic activity. GDI counts what all participants in the economy make, such as wages and profits. GDP counts the value of what the economy produces, like goods, services, and technology.

What is not included in GDP? ›

There are several things that GDP does not include such as activity between businesses, sales of goods or services produced outside the country, illegal goods or services, intermediate goods, transfer payments, and used goods.

How do you calculate real gross domestic product? ›

How is Real GDP Calculated? To calculate real GDP, we must discount the nominal GDP by a GDP deflator. The GDP deflator is a measure of the price levels of new goods that are available in a country's domestic market.

How is the gross domestic product GDP calculated by summing up? ›

A country's GDP represents the final market value of all the products and services that a country produces in a single year. Another way to measure GDP is as the sum of four factors: consumer spending, government spending, net exports, and total investment.

How to calculate gni? ›

To calculate GNI, add income from foreign sources to a country's GDP. For many countries, there isn't much difference between GNI and GDP. However, if a country receives significant foreign investment or foreign aid, GNI may be much higher than GDP.

What is the formula of Gross Domestic Product GDP at factor cost? ›

∴ GDP at factor cost = GDP at market price + Subsidies - Indirect Tax.

What is the formula for GDP growth rate? ›

To calculate the growth rate for both nominal and real GDP, two data years are needed. The GDP of year 2 is divided by the GDP of year 1 and the answer is subtracted by one. That is, Growth Rate = (GDP_Year2/ GDP_Year 1) - 1.

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