What does GDP measure?

Gross Domestic Product (GDP) measures the total value of all goods and services produced within a country's borders over a specific period, typically a year or a quarter. This encompasses everything from consumer goods and services to investments and government spending, providing a comprehensive snapshot of a nation's economic activity. By quantifying production, GDP serves as a key indicator of economic health, allowing for comparisons between different time periods or between different economies.

In contrast, other concepts like average income focus on individual earnings rather than overall economic production, the unemployment rate assesses the percentage of the labor force that is without work, and exports and imports measure trade but do not reflect the total production capabilities of the economy. Thus, the correct understanding of GDP emphasizes its foundational role in economic analysis by representing the aggregate output of a country's economy.