GDP is a number that expresses the worth of the output of a country in local currency.

1. GDP is a number that expresses the worth of the output of a country in local currency.

2. In a way, the GDP tries to calculate the value of everything that a country produces.

3. Some people use the GDP to see how ‘strong’ a country’s economy is

4. Price of Knives Quantity of knives A very simple example

5. Llerryt Country only produces 2 things:Bananas and Knives

6. Each year, they calculate the GDP to see how the economy is doing. Get your pens and calculators ready…

8. Price of knives Quantity of knives In year 1 they produce 5 bananas that are worth $1 each

9. Price of Knives Quantity of Knives In year 1, they also produce 5 knives that are worth $6 each.

10. Price of Knives Quantity of Knives The GDP for the country in this year equals (quantity of bananas X price of bananas) + (quantity of knives X price of knives)

11. So…….(5 X $1) + (5 X $6) = $35 Price of knives Quantity of knives

12. The GDP for Llerryt Country for year 1 is $35 Of course, in real life, it is not that simple, but you get the idea.