Gross Domestic Product (GDP) is the total value of all goods and services produced within a country’s borders over a specific time period. However, not all items contribute to this measure. For instance, GDP does not include:
- Non-Market Transactions: Activities such as household chores or volunteering that don’t involve a market transaction.
- Illegal Economy: Goods and services produced in the underground market, such as illegal drugs, are not counted.
- Used Goods: Items that have already been sold and are resold do not add to the current production value, thus they are excluded.
- Financial Transactions: Stocks, bonds, and other financial transactions do not reflect production of goods or services.
Essentially, GDP measures economic activity based on the production of new goods and services, while items associated with previous production, non-market activities, or the illegal economy fall outside its scope.