GDP Calculator: Expenditure & Income Approaches
Calculate Gross Domestic Product from Consumption, Investment, Government, and Net Exports—or from income components. Free macroeconomics calculator with composition chart, per capita GDP, and nominal-to-real conversion.
How to Calculate GDP: The Expenditure Formula
GDP measures total spending on final goods and services: . Consumption (C) is household spending on goods and services. Investment (I) covers business capital spending and residential construction. Government (G) is public expenditure. Net Exports (X − M) is exports minus imports—imports are subtracted because C, I, and G already include spending on foreign-made goods. If you didn't subtract M, you'd count foreign production as domestic output.
The Income Approach to GDP
The Income approach adds what factors of production earn: employee compensation, proprietor income, corporate profits, rental income, and interest. Then add indirect business taxes and depreciation (capital consumption), and subtract net income of foreigners to convert from GNP to GDP. In theory, both approaches land on the same number—every dollar spent becomes someone's income.
Real GDP vs Nominal GDP: What's the Difference?
Nominal GDP uses current prices. Real GDP removes inflation by dividing by a price index such as the GDP deflator: . A country that produces the same output both years but experiences 4% inflation will show 4% nominal growth and 0% real growth. Economists rely on real GDP for growth rates; nominal for dollar totals.
What GDP Does Not Measure
GDP ignores unpaid labor (childcare, housework), quality of life, environmental damage, and much of the informal economy. It's a useful headline for economic activity but not a complete measure of wellbeing. A nation can have rising GDP while wealth becomes more concentrated—per capita is an average that hides inequality.
GDP Calculator FAQ
? What is GDP?
Gross Domestic Product is the total market value of all finished goods and services produced within a country's borders in a given period. It's the main scorecard of economic health. The Expenditure approach: where C=Consumption, I=Investment, G=Government, X=Exports, M=Imports.
? Why are imports subtracted in the GDP formula?
C, I, and G already include spending on foreign goods. We subtract imports (M) so we only count what was produced domestically. Without that correction, we'd double-count foreign production.
? What is the difference between nominal and real GDP?
Nominal GDP uses current prices. Real GDP strips out inflation using a price index (GDP deflator): . If nominal rises 5% but inflation is 4%, real growth is only about 1%.
? What does GDP not measure?
GDP omits unpaid labor (housework, childcare), quality of life, environmental impact, and much of the informal economy. It measures economic output, not wellbeing.
? How do I calculate GDP per capita?
Divide GDP by population. For a country with $25 trillion GDP and 330 million people, that's about $75,800 per person. Use the calculator's optional Population field to see per capita instantly.