GDP is a measure of the monetary value of all the goods and services produced within a country in a given period of time, such as a quarter or year. It includes all market and some nonmarket production, such as government spending on defense or education. GDP is different from gross national product, which is the monetary value of all the products and services produced by residents of a country, regardless of whether they are sold on the market.

Economists use GDP to assess the health of an economy and to predict future growth. Governments use it to decide on public spending and taxation policies. Central banks, such as the Federal Reserve, track GDP growth to help control inflation and manage the money supply. Consumers and businesses watch GDP growth to see if the economy is expanding enough to make it worth investing in or spending on goods and services.

Consumption is the largest component of GDP and a rising figure is viewed as a positive sign for economic health. Investment is the second largest component of GDP and a growing figure indicates that companies are feeling confident about their future and are spending on things like new equipment and buildings. Exports and imports are the final components of GDP and a positive number means that the country is running a trade surplus and a negative number indicates a trade deficit.

GDP is often measured at current prices (nominal GDP) rather than adjusted for price inflation (real GDP). This makes it difficult to compare one period of time to another, as prices are always increasing over time. However, GDP is adjusted using a statistical tool called the price deflator to account for this. Another way to look at GDP is per-capita GDP, which takes population changes into account.