Gross Domestic Product is one of the most significant economic indicators in the economy.
The state of an economy is anything but static. It is an ever-changing, whirlwind phenomenon with long inputted variables within a country's economic landscape that could simply change with a single stroke of the pen. Some of these variables, when inserted into their respective economic equation, lead to indicators to can help predict the state of the economy and where it could be headed. None of these are any more important than the economic indicator of Gross Domestic Product.
Gross Domestic Product, or GDP, is defined as "the monetary value of all the finished goods and services produced within a country's borders in a specific time period" (Gross Domestic Product – GDP). Simply put, as Ryan Barnes wrote, "GDP is the godfather of the indicator world" (Barnes. Economic Indicators: Gross Domestic Product (GDP). Gross Domestic Product can be presented in an Expenditures Approach, which is the sum of the equation C + G + I + Xn and has a good read on the life of our economy. These four inputted variables can be broken down into C for consumption, G for government spending, I for investment and Xn for net exports (which is exports – imports). This equation, and answer, allows economists to good a good sense as to the present state of our economy, whether it is moving forward at expected or above-expected growth or perhaps if the economy fell a little stagnant and did not quite meet the expectations anticipated.
The indicator given from Gross Domestic Product is so closely watched that it can influence monetary and fiscal policies of the United States Government. Fiscal policies are derived by the legislative and executive branches and are only in regards to government spending whereas monetary policies are set by the Chairman of the Federal Reserve (Fiscal Policy).
