Definition
Gross domestic product (GDP) measures the market value of all final goods and services produced by an economy in a given period, usually a quarter or a year. It is the most widely used aggregate gauge of macroeconomic size and growth.
Meaning and usage
GDP can be measured on the production, expenditure or income side; the expenditure approach is commonly written as consumption plus investment plus government spending plus net exports. Growth figures come in nominal and real varieties, the real kind having stripped out price changes. Only final goods and services count — intermediates are excluded to avoid double counting.
Usage
Comparisons of economies by size and growth, business-cycle analysis and macroeconomic policy all revolve around GDP. Companies and industry researchers also use GDP growth as the baseline for the external environment.
Related and confusable terms
GDP is a macroeconomic total, while ROI is a micro-level measure of investment efficiency; the two live at different scales, so an economy’s growth rate should not be conflated with the return on any single project or outlay.