Thegrossdomesticproduct(GDP)orgrossdomesticincome(GDI)istheamountofgoodsandservicesproducedinayear,inacountry.Itisthemarketvalueofallfinalgoodsandservicesmadewithinthebordersofacountryinayear.Itisoftenpositivelycorrelatedwiththestandardofliving,alternativemeasurestoGDPforthatpurpose.

　　Grossdomesticproductcomesundertheheadingofnationalaccounts,whichisasubjectinmacroeconomics.

　　GDPcanbedeterminedinthreeways,allofwhichshouldinprinciplegivethesameresult.Theyaretheproduct(oroutput)approach,theincomeapproach,andtheexpenditureapproach.

　　Themostdirectofthethreeistheproductapproach,whichsumstheoutputsofeveryclassofenterprisetoarriveatthetotal.Theexpenditureapproachworksontheprinciplethatalloftheproductmustbeboughtbysomebody,thereforethevalueofthetotalproductmustbeequaltopeople'stotalexpendituresinbuyingthings.Theincomeapproachworksontheprinciplethattheincomesoftheproductivefactors("producers,"colloquially)mustbeequaltothevalueoftheirproduct,anddeterminesGDPbyfindingthesumofallproducers'incomes.

　　Economists(sinceKeynes)havepreferredtosplitthegeneralconsumptiontermintotwoparts;privateconsumption,andpublicsector(orgovernment)spending.Twoadvantagesofdividingtotalconsumptionthiswayintheoreticalmacroeconomicsare:

　　Privateconsumptionisacentralconcernofwelfareeconomics.Theprivateinvestmentandtradeportionsoftheeconomyareultimatelydirected(inmainstreameconomicmodels)toincreasesinlong-termprivateconsumption.

　　Ifseparatedfromendogenousprivateconsumption,governmentconsumptioncanbetreatedasexogenous,sothatdifferentgovernmentspendinglevelscanbeconsideredwithinameaningfulmacroeconomicframework.