FantasticFinance

GDP or Gross Domestic product is gross production of any economy represented in monetary terms. I t is collective earning of an economy and the first denominator of econometric analysis models.

Take a simple example suppose X is a big business man and he has variety of business and he does job also.

The list of his earning sources are mentioned below.

Hotel
Agricultural Land
Job
Medical Shop
Petrol Pump

Attributes	Annual Earnings	% share	Rank as per Gross earnings
Hotel	600000	0.12	3
Agriculture	1500000	0.3	1
Job	400000	0.08	4
Medical Shop	1000000	0.2	2
Petrol Pump	1500000	0.3	1
Gross Income	5000000	1

Percentage Share Formulae =

Hotel/Gross Earnings
Agriculture/ Gross Earnings
Medical Shop/ Gross Earnings
Petrol Pump/ Gross Earnings

Note – Agriculture and Petrol Pump earnings accounts for highest share of Gross income

Job earnings are lowest

Likewise GDP is gross earnings of different segment of an economy and above mentioned example is the most basic economic model.

The above model doesn’t reflect the true picture as only income is considered and other variables like expenses, taxes etc. as to be taken under consideration about which I will tell you in my future posts.

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