Gross domestic product (GDP)
Gross Domestic Product is an estimate of the total monetary value of the goods and services produced in a country (the money you paid your dentist, for your wardrobe, your car insurance – basically it’s what you spend you money on).
GDP is calculated over a certain period, usually a year or a quarter. It can be traced back to the 1600s when a little-known man, Sir William Petty, argued the value of what was produced needed to be calculated for the government to know what taxes to collect.
This inventor of economics must have been on to something, because GDP is still the most popular measure for an economy’s output today.
When people say the economy is growing or shrinking, they’re probably referring to GDP. And because that’s something we care a lot about, the growth percentage is a number governments and the media obsess over. Growth projections are difficult, but that won’t stop people having a go!