How to calculate GDP

Instruction
GDP- is an indicator of the final product produced. The cost of intermediate goods and services that were involved in its creation (raw materials, materials, fuel, energy, transportation, financial services, etc.) are not included in the calculation of GDP. Otherwise it would not avoid double counting. Gross domestic product is an indicator reflecting the level of production within the country, i.e. produced by its residents, namely those economic entities who are engaged in production or live in it for more than a year.
GDP can be calculated by three methods: production (as the sum of value added), end-use method (as the sum of the components of final use) and distributive (as a set of primary incomes).
When calculating GDP by the production method, the value added indicator is taken into account, i.e. the difference between the sale of finished products of companies and the cost of the costs of purchasing raw materials, materials, fuel, energy, services.In other words, this is the price of an enterprise’s products minus the cost of its creation. As a result of the summation of the added values ​​of all economic entities of the country, the size of GDP will turn out.
According to the method of final use, GDP is defined as the monetary expression of all goods and services purchased during the year, i.e. summarizes all the costs of economic entities for the purchase of finished products. In this case, expenditures include consumer spending of the population, gross private investment in the national economy, government purchases, and net exports (the difference between exports and imports of a country).
The distributive method for calculating GDP assumes the summation of factor incomes, i.e. remuneration to owners of factors of production (wages, interest, rent, profit, etc.). This takes into account the incomes of only those economic entities that are geographically located in the territory of the given country.


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